Introduction: The Lord Bishop of Ripon and Leeds

The Lord Bishop of Ripon and Leeds: John Richard, Lord Bishop of Ripon and Leeds—Was (in the usual manner) introduced between the Lord Bishop of Peterborough and the Lord Bishop of Newcastle.

Migrant Workers: Romania and Bulgaria

Baroness Rawlings: asked Her Majesty's Government:
	What provisions they plan to make following the European Union (Accessions) Act 2006 concerning potential migrant workers from Romania and Bulgaria.

Baroness Scotland of Asthal: My Lords, the Government welcome the European Commission's recommendation that Romania and Bulgaria should join the European Union on 1 January 2007. The approach to labour market access for the new member states will be gradual. We will provide details to Parliament by the end of October of the transitional controls that will be put in place.

Baroness Rawlings: My Lords, I thank the Minister for her Answer. In light of the leaks in today's Financial Times and the forthcoming Bulgarian elections, what discussions have Her Majesty's Government had with the Romanian and Bulgarian authorities with regard to the potential restrictions to prevent abuse on the right to employment in the UK?

Baroness Scotland of Asthal: My Lords, I cannot comment on speculation that there may be in the press. As I said in my Answer, we hope to answer this very shortly. Indeed, if the noble Baroness had waited with her Question just a day or so, I might have been able to give her a much fuller Answer.

Lord Anderson of Swansea: My Lords, my noble friend will recall that the Government made a spectacular underestimate at the time of the last accession. Bulgaria and Romania are poorer than the countries that joined at that time, and there is the Moldovan question. Can my noble friend give some idea of the Government's estimate of the number of Moldovan citizens who have Romanian passports? Some estimates say that there are between 300,000 and 600,000 of them. Presumably, the Government and the European Union have some estimate of how many Moldovans have Romanian passports.

Baroness Scotland of Asthal: My Lords, there are no confirmed estimates. It is really a matter for the Government themselves to determine that figure. We know that appropriate measures have been put in place, and the question of how Moldovans may avail themselves of the appropriate citizenship has been a matter of debate for some time.

Lord Avebury: My Lords, if nationals of Bulgaria and Romania are allowed to reside here on the same basis as A8 workers, they would not have a right to be here if they were unemployed or seeking work. As, in the last quarter, we have reached the highest number of people employed and hours worked since records began in 1971 and A8 nationals have made a significant contribution to the UK's economic success over the past two years, should not we build on that experience and admit workers from Bulgaria and Romania on the same basis as A8 nationals?

Baroness Scotland of Asthal: My Lords, the noble Lord is absolutely right about the contribution made by A8 nationals. I agree with him on that, but there are certain transitional issues to which the Government have given anxious consideration, and those considerations will be clarified once we publish how we are going to ensure that this gradual introduction is managed in a way that takes advantage of the opportunities of having new employees available to us and safeguards the best interests of the people of this country.

Lord Jopling: My Lords, will the rights of migrant workers from Moldova be extended to Transnistria, which, while still Russian-occupied, is technically still part of Moldova?

Baroness Scotland of Asthal: My Lords, the issue is really whether the Moldovan national is also a national or citizen of Romania. That will determine whether they have access, not their Moldovan nationality or citizenship.

Lord Campbell of Alloway: My Lords, when does the noble Baroness think that a satisfactory Answer could be given to this Question after this "anxious consideration" by the Government?

Baroness Scotland of Asthal: My Lords, we are intending to publish, as I said, at the end of October. The publication of the Government's position is imminent.

Lord Stoddart of Swindon: My Lords, have the Government received any communication from the Race Relations Board or elsewhere expressing concern that an influx of people from Romania and Bulgaria might lead to an influx of white racists?

Baroness Scotland of Asthal: My Lords, I assume that the noble Lord is referring to the Commission for Racial Equality, as we no longer have a race relations board to the best of my knowledge and belief. I know of no such assertion having been made, but of course I will check, and if I am wrong on that I will write to the noble Lord.

Lord Roberts of Conwy: My Lords, have the Government learnt any lessons from the Polish accession experience that are relevant to Romania and Bulgaria?

Baroness Scotland of Asthal: My Lords, we have learnt a great deal. The Polish nationals who have come to this country have benefited us greatly, as many nationals will know. They have been only an asset.

Lord Teverson: My Lords, is not the real challenge to have all other member states of the European Union give full rights to Romania and Bulgaria on accession? That is an opportunity, as well as a potential problem, for all those states. Would that then not give those citizens the true rights of freedom that they should have as European citizens?

Baroness Scotland of Asthal: My Lords, it is right to say that only four states welcomed the A8 in the way that we did and that that may have been an issue, but we have taken all those factors into account. We hope to put forward a scheme that will be welcoming but will also take advantage of some of what we have learnt from the accession of the other eight countries.

Common Agricultural Policy: Single Farm Payment

Baroness Byford: asked Her Majesty's Government:
	How many farmers are still due their full or partial single farm payment for 2005.

Lord Rooker: My Lords, I take this further opportunity to apologise on behalf of the Government for the delay in payments to farmers earlier this year. The situation as at 17 October is that 114,037 claimants, which amounted to 97.91 per cent, had received a total of £1.51 billion, which is 99.7 per cent of the total money. That was the money paid in full or partial payments.
	Approximately 2,400 claimants have yet to receive a payment. Most of those have claims valued below €1,000—around £680. That figure includes 58 outstanding Priority 1 claimants who are due a payment of over €1,000, including complex cases such as probate, liquidation and business partnership disputes.

Baroness Byford: My Lords, I thank the Minister for that reply. Does he accept the finding of the National Audit Office report that the delayed English single farm payment system has cost farmers between £18 million and £22 million in interest and arrangement fees on additional bank lending, to say nothing of the human misery and the suicides that have followed? What do the Government intend to do to avoid a 2006 fiasco, when the chief executive's estimate is that it will take 18 months to two years to get the system up and running properly?

Lord Rooker: My Lords, the chief executive has said nothing different from what I have said in the House on more than one occasion. We are speaking from the same evidence. That is why we draw the same conclusion, which is to warn people that the 2006 scheme started before May this year when the forms were sent out. The 2007 forms will be signed off within a month or a few weeks' time. It will be 2008 before substantial changes can be made to the system. In any event, making substantial changes to the system year on year is a recipe for disaster.
	I warn farmers and everybody else that the payments year we are entering—the window starts 1 December this year—will be as difficult as the previous year, not least because the first year has an effect on the second year. This year's difficulties relating to mapping and other issues relating to the 2 million-odd fields in this country on which payments will be made will have a legacy for next year. That is why we are not making any promises about when we will be able to start. We hope to deliver a better system, but hope is not the basis on which I intend to respond to the House.

The Countess of Mar: My Lords, has the position of the former chief executive, Mr Johnston McNeill, who was sacked seven months ago, been resolved? It sticks in the craw of hill farmers, to whom £2,000 is a fortune, when they hear of him still getting £114,000 a year, after being sacked last March.

Lord Rooker: My Lords, the position of Mr McNeill, who is a civil servant and still on the department's books, is to be settled by the permanent secretary and the management of the Civil Service. As regards the inquiry, I believe that the Public Accounts Committee will take evidence next Monday from the permanent secretary of the department and the current chief executive on the report that was published last week. Therefore, there is nothing more that I can say about the named individual. Other individuals, including former Ministers and officials, are giving evidence about what has happened.

Baroness Sharples: My Lords, what is the estimate of the number of farmers who may go bankrupt because of this disastrous situation?

Lord Rooker: My Lords, I cannot give an estimate because I do not have any evidence or figures on that matter. In any event, it would be difficult to tie down farmers' cash flow to precise cause and effect. We are paying modest interest on delayed payments after 30 June subject to a de minimis. I have no evidence of bankruptcy. Likewise, I have no evidence of suicides, as mentioned by the noble Baroness, Lady Byford, in her first supplementary.

Lord Corbett of Castle Vale: My Lords, did the Minister, like me, hear the noble Baroness, Lady Byford, ascribe suicides to the non-payment of the single farm payment? Does my noble friend have any evidence of that?

Lord Rooker: My Lords, as I said in answering the previous question, I do not. If there had been such evidence, I am sure that I would have heard about it. I am not saying that people have not suffered illness or distress as a result of this situation. People who were specifically promised that they would receive money on certain dates but have not received that money have suffered terrible turmoil. There is no question that people took on debt. Their suppliers had to be paid, or not as the case may be. There has been massive turmoil.
	We have allocated more money to tackle rural stress as farmers asked for help. I am not knocking that in any way. It has been a terrible year. As I say, we apologise for that, and we hope that it will not happen again. Rural Payments Agency staff are working their socks off to ensure that it does not. However, in my present position, I cannot make any promises.

Lord Livsey of Talgarth: My Lords, the Minister has inherited a difficult situation that is not of his making. None the less, the noble Baroness mentioned the additional interest paid by farmers. Some 11 per cent of farmers have had to extend existing loans, 8 per cent of those through not being paid or operating at a loss. The NAO report says that it was a "high risk project". Matters were underestimated, and the progress reporting was wholly inadequate. Would it not be better temporarily to adopt the payments system operating in Scotland and Wales, which is based on static historic payments, if farmers are not going to be secure in their payments for the next two years?

Lord Rooker: My Lords, we cannot do that. The 2006 scheme is already under way. The forms have been sent out. The European Commission has approved the system that we are using. It will also be used in 2007. The noble Lord's question and the theme that lies behind it—whether we should tear it up and go back to the old historic payments system— is one that I can assure him has been asked in the department.
	Nevertheless, we are looking to make the best of this system, which has the potential to be much better than the systems used in the devolved Administrations. However, for various reasons, as highlighted in the National Audit Office report last week, every factor on the risk issues is read, as everyone can see on page 43, with policy changes made late. Eleven schemes into one is good, but under the 11 schemes the money was paid earlier than under the one scheme. However, the potential is a lot greater. I cannot give an assurance on interest payments at the moment, simply because we owe 5,319 farmers top-up payments, and until they are paid we cannot work out the delay in the payments to pay the interest to them.

Lord Plumb: My Lords, I am sure that the Minister has done everything possible to bring some order out of chaos, but does he realise that the 10 schemes listed in the National Audit Office report could be multiplied by more than 1,000 for people who have suffered stress and loss of revenue? Loss of revenue is one thing, but the loss of trust and confidence, both in the Government and in the department, is considerable. Why cannot the English scheme be delivered in the declared time scale when the Germans, who applied exactly the same scheme, paid on the nail within a matter of weeks from the beginning of their scheme? Is the answer therefore to consider an early partial payment for this year to try to restore some confidence in the Government?

Lord Rooker: My Lords, I do not have the details for Germany with me, but as I understand it Germany did have problems. A team from the Rural Payments Agency went to Germany in the summer to discuss some of the common difficulties that we had had. Notwithstanding that, I understand that France and the Republic of Ireland are making advance payments.
	The point that the noble Lord, Lord Plumb, asked about is under consideration. No decisions have been made. We asked the Rural Payments Agency in July to assess the position on the scenarios for the payment prospects for 2006 and whether there could be partial payments. Partial payments could be illegal under Common Market rules, or they could be legal, depending on the dates when they are paid and the knowledge that they are paid. These matters are being actively considered, and it will not be too long before Ministers can give directions to the RPA on which route to go down. Obviously, we want to get money to farmers faster and to give them certainty, but we cannot afford to have anything remotely like what happened this year, when dates were given and not delivered. Given the lack of trust, what farmers want is certainty. They may have to wait to get certainty, so that we do not take the risk of again having the catastrophic lack of trust that we had this year, which would be compounded if there was a problem two years running.

NHS: Hospital Chaplaincy

The Lord Bishop of Worcester: asked Her Majesty's Government:
	In light of the actions of the Worcestershire Acute Hospitals National Health Service Trust, what steps they are proposing to take to ensure adherence to the Department of Health's guidelines on hospital chaplaincy.

Lord Warner: My Lords, the Department of Health remains supportive of the guidance issued to NHS trusts in November 2003 about patients' access to spiritual care, irrespective of their faith or beliefs. NHS trusts are responsible for delivering that care in a way that meets the diverse needs of their patients. How they do so is a matter for local decision, particularly as these arrangements now vary considerably. It is not for Ministers to intervene in these local matters.

The Lord Bishop of Worcester: My Lords, I thank the Minister for his reply, though in our locality there is difficulty in believing that the trust, which has been condemned for this decision by virtually every democratic body in the area, is really responsive to local opinion. Is the Minister prepared to look at the mounting evidence that the trust's decisions are motivated not, as claimed, by the need to get the books to balance but by a more ideological position on chaplaincy that actively subverts the guidelines of the Department of Health? If he finds that evidence—I am happy to supply it to him—compelling, would he then feel it appropriate for the Government to intervene in defence of the holistic concepts that lie at the heart of the health service?

Lord Warner: My Lords, the evidence available to me is somewhat different from that available to the right reverend Prelate. The trust has a substantial funding gap that it has to make good by some £8 million this year and £16 million next year. It has to lose 675 posts, only three of which relate to chaplaincy. From the evidence that I have been given, the trust has good reasons for its decisions. One must bear in mind that the loss of three chaplaincy posts would be the equivalent of losing about four nurses.

Lord Faulkner of Worcester: My Lords, does my noble friend accept that support for the campaign launched by the right reverend Prelate goes way beyond the Church of England and includes many local community groups and the Amicus trade union? Does he not also accept that it would be most unfortunate if the hospital chaplaincy generally, outside Worcestershire, were seen as a soft target by health service trusts anxious to save money?

Lord Warner: My Lords, I do not think that there is any evidence whatever of that, but if the right reverend Prelate wishes to give me such evidence I will certainly look at it. I have seen no evidence that there is some conspiracy to do down the chaplaincy throughout the NHS. The Worcestershire trust is trying to deal with some outstanding financial deficits, which it has to do. All of us want the NHS to balance its books properly; the trust is taking the appropriate action, and Ministers owe it to the trust to support those actions.

Baroness Gardner of Parkes: My Lords, does the Minister accept that people have spiritual needs and that chaplaincy is an important part of their healthcare because otherwise they might become much more distressed and not benefit from the treatment that they receive? Would the Minister consider another way of dealing with chaplaincies, through other organisations or bodies? If such groups were prepared to support chaplaincies, would the department be prepared to encourage them to continue?

Lord Warner: My Lords, the noble Baroness is right. She puts her finger on the point that there are many ways to provide such spiritual care. We supported that, as Ministers and as a department, through the 2003 guidance, but we have to leave local people to arrive at local decisions on the best way of providing that spiritual care.

Baroness Neuberger: My Lords, does the Minister accept that, if there are cuts to chaplaincy services, there may be some difficulty meeting the guidelines set out, for example, in the Liverpool Care Pathway and the end-of-life care strategy that the cancer tsar, Professor Mike Richards, is preparing? Does he further accept that the Government have said that NHS organisations should make provision for those services? It is important to know the extent to which the Government are monitoring whether the arrangements are properly in place and that they will be maintained.

Lord Warner: My Lords, I cannot think of another way of saying how much we stand by the 2003 guidance. We acknowledge those needs and have always made clear that it was guidance, not a performance management system. I thought that both Benches opposite were in favour of the Government giving local people more independence to make their own decisions.

Baroness Hanham: My Lords, is the Minister aware that the attributes of hospital chaplains are unique—those of not just the Anglican or Catholic faiths but all other faiths—and that their attachment to a hospital is of enormous benefit to the patients who need them? As chairman of a hospital that has an active and vital chaplaincy that encompasses all faiths, I hope that the Minister will make clear his support for maintaining the hospital chaplaincy.

Lord Warner: My Lords, I am aware of what the noble Baroness has said, and I have indicated our support for the guidance. I have looked at the Church of England website, which shows that the number of full-time stipendiary clergy fell from just over 11,000 in 1990 to some 8,700 in 2005. Reductions in their services were going on outside the NHS.

Diplomatic Protection

Baroness D'Souza: asked Her Majesty's Government:
	What is their response to requests for diplomatic protection from United Kingdom residents and refugees granted political asylum in the United Kingdom who are detained, or otherwise in need, abroad.

Lord Triesman: My Lords, the Government are not in a position to provide diplomatic protection or consular assistance to foreign nationals. This includes those who have refugee status in the United Kingdom and who are or have been resident in the United Kingdom.

Baroness D'Souza: My Lords, I thank the Minister for his Answer. I shall refer specifically to Guantanamo Bay. The UK wishes to see this prison camp closed and, indeed, has described it as an abomination. The US wants to return nine of those still held, two of whom have refugee status in the UK and whose rights should therefore be indistinguishable from those of a UK citizen. One has long-term residency and the others various lengths of residency in the UK. None of the nine has another state to which to apply for any form of protection and none of them has been charged with an indictable offence, but the UK is apparently unwilling to accept them because of the stringent control orders imposed by the USA. I simply wish to clarify to whom, if anyone, these people can apply for justice, following well documented and severe ill treatment while being held at Guantanamo Bay.

Lord Triesman: My Lords, we tell refugees who have refugee status in the United Kingdom that should they choose to travel abroad and should difficulties arise—they are told this before they leave the United Kingdom—they can apply, as all refugees can, to the United Nations High Commissioner for Human Rights through the local offices, which provide a full range of excellent services. We most certainly do not expect them to have to return to or to apply for assistance from the country from which they were refugees in the first place. The Home Secretary is the person who will take a decision about whether they can be returned to the United Kingdom in the event that they are released. In the judicial review, both the High Court and the Court of Appeal found that the only proper stance that he could take in these circumstances, until such time as their release became imminent, was the one that I have just described.

Lord Wallace of Saltaire: My Lords, is there not a need for further clarification of the law on the obligations of the British Government to long-term residents who have refugee status? We are all concerned, particularly in the Guantanamo case, about the number of people who are effectively being made stateless because they have lost or are in danger of losing their resident status here and have nowhere else to go to. What legal obligations under international and domestic law do Her Majesty's Government recognise?

Lord Triesman: My Lords, in these cases, there are no obligations under international or domestic law. That was precisely the point that was put to the High Court and to the Court of Appeal in October, and the matter was resolved unequivocally in those courts. Of course there were discussions between the families of those individuals and my noble friend Lady Symons, who was at the time responsible for these matters. She passed on the views of those families to the United States. So we were not unhelpful to them, but we have no obligation to go further in law, and that has been the position for a very long time.

Baroness Symons of Vernham Dean: My Lords, is it not the case that diplomatic protection cannot be extended unilaterally by a single Government in the way that the original Question implies? Is it not also the case that the Government can and, indeed, do intervene on a humanitarian basis on matters relating not just to Guantanamo but to other United Kingdom residents who may be held in other countries?

Lord Triesman: My Lords, I completely agree with my noble friend. We make representations on behalf of a large number of people in an effort to persuade Governments to behave in an appropriate and humanitarian way. Indeed, I and others often have the opportunity to express views about that to the House. The whole issue of diplomatic protection has perhaps been somewhat misunderstood. It means the invocation by one state through diplomatic action or other peaceful means of settlement, on the basis of state-to-state judicial proceedings, of the responsibility of the other state for a wrongful act to the citizens of the first state. In other words, legally you can act in that context only for a citizen of your own state.

Armed Forces Bill

Baroness Crawley: My Lords, I beg to move the Motion standing on the Order Paper in the name of my noble friend.
	Moved, That the amendments for the Report stage be marshalled and considered in the following order:
	Clauses 1 to 53,Schedule 1,Clauses 54 to 113,Schedule 2,Clauses 114 to 164,Schedule 3,Clauses 165 to 169,Schedule 4,Clauses 170 to 181,Schedule 5,Clause 182,Schedule 6,Clauses 183 to 206,Schedule 7,Clauses 207 to 272,Schedule 8,Clauses 273 to 276,Schedule 9,Clauses 277 and 278,Schedule 10,Clauses 279 to 321,Schedule 11,Clauses 322 to 351,Schedule 12,Clauses 352 and 353,Schedule 13,Clauses 354 to 358,Schedule 14,Clauses 359 to 370,Schedule 15,Clauses 371 to 378,Schedules 16 and 17,Clauses 379 to 386.—(Baroness Crawley.)

On Question, Motion agreed to.

Animal Welfare Bill

Report received.
	Clause 4 [Unnecessary suffering]:

The Duke of Montrose: moved Amendment No. A1:
	Page 3, line 4, insert-
	"(f) whether the practice was a part of traditional animal husbandry in areas of mountain and moorland."

The Duke of Montrose: My Lords, it is good to see that the Government are set on completing this very important legislation, which has been a long time in process. It is always a good challenge to come back to a Bill after switching off over the long Recess, and I am sure that we are all now approaching it with fresher minds and more concentration.
	As I did in full at Second Reading, I declare my interest, particularly as a hill livestock farmer in Scotland. In that regard, this legislation does not apply to me, so I hope that your Lordships will allow me to voice my concerns.
	At first sight, the precise wording of my amendment may appear a bit too specific to appear in what is generally an enabling Bill, but the Government have allowed certain specific areas of concern to be mentioned, so I feel that there is justification.
	In the Bill, we are replacing legislation going back to the Protection of Animals Act 1911, including Part I of the Agriculture (Miscellaneous Provisions) Act 1968. The comforting thought is that we are to extend to all animals the same protection that currently ensures the welfare of livestock situated on agricultural land.
	At Second Reading, I raised the concern that, as well as having a greater understanding of what constitutes the welfare of animals, we now apply different standards of judgment from those required 90 years ago. There is a real question whether truly extensive hill farming can meet the sort of standard that can be easily identified by the public in livestock husbandry carried out on low ground.
	Perhaps I should say that, if the Minister finds difficulties with my amendment, it might be possible to address some of my concerns in the context of Amendment No. 7, in the name of the noble Baroness, Lady Miller of Chilthorne Domer, which I would support. The context in which this might arise would be in regard to the Government's attitude to the degree of domestication of hill sheep and even, in some cases, cattle. We will debate later what constitutes a "degree of domestication".
	These animals are bred for their hardiness and their ability to withstand harsh conditions. As part of the process of natural selection, which has established these breeds, a certain number do not survive annually. Good management means that many steps are taken to protect them from infection and disease, and it is not uncommon for farmers and shepherds to struggle out with bales of hay when sheep get cut off by snow drifts, but not much can be done when the problem is sheep getting washed away in swollen rivers and streams.
	As noble Lords may know, part of the management employed is to allow the animals to gain condition through the summer and autumn in order to be able to use that energy source and emerge in a lean condition in the spring. One reason that shepherds will go through their flocks to cull those that are found to have what are termed "broken mouths" is that those sheep will have difficulty in pulling through, but others will succumb for other reasons.
	Again, because of the terrain and its extent, a shepherd may be able to get around only a quarter of his ground in a day, so there will be days when many individual sheep will not be supervised. Given the current state of the industry, that problem is only likely to get worse.
	Other issues arise given the fact that, when sheep are gathered for handlings—a process that can take two or three days—there is no guarantee that all the sheep will have been found, and so things such as one-day duration treatments for sheep scab are likely to be counterproductive.
	There is also the problem of what action to take if it has not proved possible to castrate all the male lambs before they are seven days old, as required by the current code of welfare. A small handful of uncastrated lambs loose on a mountain can cause havoc with the breeding programme. It is a question of whether my concern should be directed, as I have done, at Clause 4, which deals with cases where,
	"an act of his, or a failure ... to act, causes an animal to suffer",
	or at Clause 9, headed:
	"Duty of person responsible for animal to ensure welfare".
	Either way, one must question the ability of the Government to make such allowances only later in regulations must come into question.
	This concern encompasses the question of the livelihood of current hill farmers, but there is also an ecological question of whether the type of upland landscape that we desire can be maintained without the grazing provided by sheep and cattle managed on an extensive basis. I know of nature reserves where yearly mowing has had to be introduced to produce a habitat for ground-nesting birds, and there are many areas of mountain where an animal is the only realistic form of mowing that can be contemplated.
	My contention today is that we will not have produced a truly comprehensive regime for animal welfare unless we address these issues. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I, too, welcome the arrival of Report stage of this extremely important Bill, and look forward to debating the issues that we did not resolve in Committee. We have had a long Recess and it is quite hard to cast one's mind back, but on the other hand, that gap has allowed the Government to make helpful progress. I thank the Minister and his team for the progress made to date and what we have received on it.
	The noble Duke raises some extremely interesting questions in his amendment. Indeed, he goes to the heart of my amendment, on the degree of domestication, which I shall speak to later. He referred to hill sheep—perhaps a hefted flock, which pretty much looks after itself day to day. I could speak, for example, about the difference between the wild ponies of Exmoor, which are very different from thoroughbreds, which need a rug in chilly wind or weather. The noble Duke is right to mention the problem of undergrazing, whether on mountain, moorland or—where I spent some of the Recess—in the Culm grassland of Devon. That area is experiencing undergrazing not overgrazing, with all the knock-on effects on species that—people may not even appreciate—depend on grazing. For example, we are used to hearing curlews on estuaries, but they rely on a suitable site to nest. A site that has become semi-scrub and brambly rather than rough grassland will not be suitable.
	The question of how animals are treated and how the public will react to those animals to which the noble Duke referred is critical. I very much look forward to hearing the Minister's reply on these issues.

Lord Rooker: My Lords, I am grateful to the noble Duke for the way in which he introduced his amendment. I believe that I can reassure him because essentially he is asking for a commitment that what he described as being in some ways traditional farming practices in areas of mountain and moorland will not be made illegal under this Bill. Broadly speaking, I can say that they will not.
	The special regulations relate not exclusively but mainly to sheep. The noble Duke is concerned that sheep management practices that take place now should be allowed to continue. We understand that. The practices that he is concerned about will still be legal. Indeed, under Clause 5, some mutilations are banned. However, a number of practices which involve the short-term suffering of the animal on the mountain have a longer-term gain. It is custom and practice, and it works: the animals benefit from it. A number of mutilations—that is the technical word—in the interests of good husbandry should therefore be permitted in mountain and moorland circumstances.
	There are obviously going to be some regulations, referred to by the noble Duke, which will go out to public consultation in the next few weeks, enabling them to come into force next April. The general point that I have made, however—that we do not intend to outlaw traditional practices of husbandry in the interests of the animals—is sufficient for this short debate and the issues raised.

The Duke of Montrose: My Lords, I thank the Minister for clarifying the point. I am sure we had all taken it for granted that the Government do not currently intend to make it increasingly difficult for hill farmers. The worry in my mind is whether, given the wording of the legislation, some future judgment might be made that what is done, such as a shepherd finding a lamb over a week old and castrating it on the hill, causes unnecessary suffering. As the Minister says, it is short-term suffering but for a much greater benefit.
	We will take this away and think about it further. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 6 [Docking of dogs' tails]:

Lord Rooker: moved Amendment No. 1:
	Page 4, line 3, at end insert ", that the first and second conditions mentioned below are met.
	(4A) The first condition referred to in subsection (4) is that there has been produced to the veterinary surgeon such evidence as the appropriate national authority may by regulations require for the purpose of showing"

Lord Rooker: My Lords, I will also speak to Amendments Nos. 2 to 4.
	A considerable amount of time has been spent—long before I joined the department—discussing the docking of dogs' tails. The Government's amendments are in response to the amendment tabled in Grand Committee by the noble Lord, Lord Soulsby of Swaffham Prior, prompted by concerns raised by the Royal College of Veterinary Surgeons. The RCVS was worried that a vet could be accountable if they had been misled into docking a dog illegally, and that assessing whether a dog was "likely to work" from evidence provided was not within their professional expertise and training.
	Rather than having to certify that, in his opinion, a dog is likely to work, the amendments will allow a vet to certify that he has seen the evidence required by regulations to demonstrate that the dog is likely to work. On that basis, I beg to move.

Baroness Byford: My Lords, on our behalf and that of my noble friend Lord Soulsby, I thank the Government for looking at these amendments. I would like the House to know that my noble friend has a hospital appointment, so cannot be here today.
	I remind the House of my own farming family background, although we are without livestock. I am also an honorary associate member of the Royal College of Veterinary Surgeons. We support these amendments, and are grateful to the Government for taking our concerns away and coming back with something that will make it easier for those in the veterinary service to undertake their duties.

The Countess of Mar: My Lords, I, too, declare in interest: I am a partner in our small family farm and we have livestock. What knowledge does the Minister have of the means by which these puppies that will have their tails docked will be identified? I understand that chips are now in, whereas they were not before. Has that been conveyed to him?

Lord Rooker: My Lords, I do not specifically know how the animals will be identified. I imagine vets would have to be as certain as possible that they were dealing with the animal so presented to them, and paperwork would be needed to explain the likelihood of the animal working or not. I cannot, however, say whether they will be chipped or not.

Baroness Fookes: My Lords, I am sorry to bring a discordant note into the proceedings. I have long opposed the docking of dogs' tails and remain very unhappy about the exemptions allowed for working dogs. I appreciate that the Minister has sought to allay our fears, but he has not taken my fears away completely. It will be difficult to decide the fate of an animal when it is small and to know whether it will be a working dog. I also question whether all working dogs need to have their tails docked. I understand that police dogs, which are often German Shepherds, do not normally have their tails docked, and they do all kind of things that might be dangerous to them. I remain very disappointed. I believe that the Bill originally ended the docking of dogs' tails, and this provision is much less than I hoped for.

Baroness Farrington of Ribbleton: My Lords, I must remind the House that this is Report and the Minister has responded. I am being as gentle as possible.

Lord Rooker: My Lords, I paused before I answered the noble Countess in case any other noble Lord was getting up. The noble Countess did not intervene; I had finished and she was asking a specific question. I am happy to facilitate debate, and I do not want any noble Lord to say that the Minister refused to answer. On the other hand, I must conform to the rules of the House.
	However, I say to the noble Baroness, Lady Fookes, that this matter was fully debated. It was the subject of a free vote, and this is the conclusion that the majority arrived at. However, I accept that there is a minority view on this matter.

On Question, amendment agreed to.

Lord Rooker: moved Amendments Nos. 2 to 4:
	Page 4, line 9, leave out "and (b) that it" and insert-
	"(4B) The second condition referred to in subsection (4) is that the dog"
	Page 4, line 10, leave out "such"
	Page 4, line 11, at end insert "made by the appropriate national authority"
	On Question, amendments agreed to.

Baroness Miller of Chilthorne Domer: moved Amendment No. 5:
	After Clause 8, insert the following new clause-
	"CIRCUS ANIMALS
	(1) For the purposes of a circus, a person commits an offence if he uses or keeps an animal not of a kind designated under subsection (2).
	(2) For the purposes of subsection (1), the Secretary of State may by regulation designate a kind of animal if he is satisfied, on the basis of scientific evidence, that the welfare needs of an animal of that kind is likely to be met if they are used or kept for the purposes of a circus.
	(3) In this section, "circus" means the keeping or introducing of animals wholly or mainly for the purpose of performing tricks or manoeuvres at more than one place during any period of one year."

Baroness Miller of Chilthorne Domer: My Lords, Amendment No. 6 concerns circus animals and is similar to an amendment I tabled in Committee. These Benches believe that obliging the Government to licence the kinds of animals which they consider suitable for life in a travelling circus is a stronger starting point. A number of welfare organisations—Animal Defenders International, the RSPCA and the Born Free Foundation—agree that the Government's decision to use a circus working group to consider the welfare needs of animals is a useful way forward. However, like those NGOs, we believe that the measure would be simpler and more effective if the burden of proof were on those who would legitimise the use of a kind of animal, as this amendment suggests, rather than assuming that all animals should be available for travelling circuses and the working group then discussing which sorts of animals it should ban.
	If a positive list were produced, it would get around the problem of the collection of evidence. If one wants to ban using an animal, there will have to be evidence of cruelty. It would be much simpler if an animal had to be shown to be suitable. The amendment would require those who would include a kind of animal to bring proof of the potential to meet its welfare needs, rather than oblige others to go searching for abuses. That is important because the itinerant nature of a travelling circus makes it hard to track the welfare of an animal at all times. The Bill must provide for an animal's welfare in performances, at rest and on the road. It has consistently proven difficult for scientists to investigate the whole working life of circus animals. This amendment would look after the needs of domesticated and exotic species alike. At the moment, only a handful of circuses in the UK use animals, so it would not be a hard task to work with those practitioners to verify their good welfare standards where they are met.
	A brief from the RSPCA tells us that the minimum display pen sizes advocated by the Association of Circus Proprietors of Great Britain for big cats, bears, zebras, camels, pygmy hippos, giraffes, elephants and primates are, on average, 70 per cent smaller than the recommended outdoor enclosure sizes in zoos. Why, if there is a minimum recommended size and the animals are of the same species, should there be that double standard?
	The Minister will be aware that, in the other place, Early Day Motion 1626 calls for the prohibition of animals in circuses now and has received 144 signatures. My amendment does not go that far. It recognises that the Bill is a framework Bill and that there is a circus working group, and therefore does not call for a complete ban. It calls for a standard of proof of welfare to be required where animals are used, rather than the more difficult and costly proof of abuse. I should appreciate a commitment from the Minister that the remit of the circus working group will be changed in line with that. It is a minor modification to change the remit of the working group, but the benefits will be very great. I beg to move.

Lord Kirkhill: My Lords, I support the noble Baroness and agree with all her remarks. As I said more than once in Committee, I am a prohibitionist. I think—and there is some evidence to show that my thoughts are right—that travelling circuses train animals cruelly, at least initially. When moving about the country with various groups of animals, they fail to provide the basic standards for an entertainment situation.
	The amendment represents a minor but useful change. The circus working group should be quickly established. I am disappointed that the Government throughout the Bill have dealt with almost all issues by regulation. That is very unsatisfactory. The evidence is clearly that, in the main, circuses are cruel to animals and that the beasts are inadequately looked after. The noble Baroness should be supported in all her remarks.

Baroness Fookes: My Lords, I, too, welcome the moderate amendment that has been proposed. It is moderate because, like the noble Lord, I am basically an abolitionist in this matter. I am concerned not only about training methods but especially about the stress caused through travelling, especially under difficult conditions. I very much hope that the Minister will look kindly on the amendment and that, if it is unacceptable, he will at least bring forward something very akin to it.
	I should have declared a non financial interest as a vice-president of the RSPCA, which slipped my mind—my apologies.

The Countess of Mar: My Lords, I, too, support the noble Baroness, Lady Miller of Chilthorne Domer. She has been an excellent advocate for circus animals throughout the passage of the Bill. Her amendment is very small and the Minister should have no hesitation in accepting it.

Lord Christopher: My Lords, I, too, support the amendment, which is moderate. I share the views of my colleague that the Government have been very restrained in the Bill as a whole. I am uncomfortable with the way it has been dealt with in that regard. That said, a circus with performing animals has by definition at least to be providing a totally unnatural life for the animals concerned and almost certainly involves cruelty.

Baroness Byford: My Lords, we, too, look favourably on the amendment. As the noble Baroness, Lady Miller of Chilthorne Domer, knows, in Committee I moved an amendment totally to ban the use of wild animals in circuses. Obviously things have moved on since then. We are lucky in that time has passed between stages of the Bill. I would be grateful for the Minister's clarification of one or two matters when he responds.
	There are currently two working groups on circuses. One, I believe, deals only with the welfare standards of performing animals. I also understand that another group was set up in July/August, chaired by Mike Radford, to consider scientific evidence of the welfare of those animals. We now hear that another working group may be set up. I am becoming confused about the number of working groups and study groups there are, and it would be enormously helpful if the Minister could clarify this. The Government's decisions on these issues must be based on scientific evidence; otherwise it is very difficult to make judgments.
	I was glad to hear the noble Baroness say that the working group's remit will be altered to include the training of these animals. I was not aware of that. Again, will the Minister clarify that?
	I should add that it seems, unless the Minister tells me to the contrary, that no animals from the wild are put to perform in circuses. If that is not so, that is another worrying matter. I look forward to hearing the Minister's answers.

Lord Rooker: My Lords, this issue has been debated at every stage of the Bill. It is good to report, although I accept that it never goes far enough, that our timetable for producing regulations on wild animals in circuses is now 2008—it used to be 2010—as a result of pressure from the Committee of your Lordships' House.
	As we just heard in the past two minutes, many people feel very strongly about this issue. Since the issue was last discussed in Grand Committee—I believe in July—the Defra working group, chaired by Mike Radford, the academic lawyer with extensive knowledge of welfare issues, has started work. The group is gathering and reviewing relevant available scientific evidence on the welfare needs of non-domesticated animals in environments comparable to a circus. It plans to report its findings early next year, and our aim is that draft regulations should go to consultation towards the middle of next year, with the aim of being brought into force in April 2008. That is two years earlier than originally planned. We cannot produce all the regulations at once. That is simply impossible. The resources are not there, and there must be prioritisation. Indeed, the priorities have changed as a result of pressure from Parliament.
	The noble Baroness, Lady Miller, proposes a total ban with exemptions, but we believe that Clause 12 is sufficiently wide to enable us to achieve through secondary legislation the result that she seeks. There is no reason why a Clause 12 regulation could not achieve the same result as a ban with exemptions. I therefore do not rule out a total ban. I would not do so. Nor do the Government; Ben Bradshaw, the Minister concerned, made that absolutely clear. However, having asked a group of professional people to look at this, it would not make sense to pre-empt their findings or those of the subsequent public consultation on the issue. By definition, there will be a public consultation because of the regulations. I have been on the receiving end of many representations—indeed, I have made them myself—and we have given a commitment to ban the use of certain non-domesticated species in travelling circuses and to ensure that the standards that are applied to zoo premises are applied to permanent circus premises, provided that that is appropriate. We have begun, as I say, examining the available evidence with affected and interested parties. The Bill is enabling and a lot of the work will be done by secondary legislation which becomes highly targeted and more detailed than can be put in a Bill. We have progressed from the point that we reached in Grand Committee, and I therefore hope that the provision will be acceptable to the House. We have moved the timing priority considerably. There is no question but that the objective sought in this amendment can be achieved under the Bill.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. The objective sought cannot be achieved under the Bill, which is exactly why I have moved my amendment. Although it is good that the priority has moved, the Minister has not reassured me that the emphasis has changed one bit. He said that there is no reason why the Bill could not achieve the objective, but, equally, there is no guarantee that it will be achieved without the change proposed in the amendment.
	I thank all noble Lords who have supported me. I will carefully read the Minister's explanation about the different working groups, although I am not sure that he gave the noble Baroness, Lady Byford, a full answer on what they would address. I will consider the position between now and Third Reading. I believe that the mood of the House is that the amendment is modest and merely trying to be more specific about the remit of the working group in pointing it to improving welfare standards. The Minister said, crucially, that the equalisation between zoo and circus facilities would apply to circus permanent facilities. However, I was talking about circus travelling facilities. So I fear that the reply is lacking in that respect. I will bear all those points in mind for Third Reading. I hope that, in the mean time, the Minister will give us a fuller reply on the exact remit of the working groups.

Lord Rooker: My Lords, I will certainly provide all the details and the membership of the working groups. I must assume that the membership list in front of me is a matter of public record. If it is not available, it certainly ought to be. I am certain that it is. I will ensure that a note is prepared both on the remit and certainly on the membership. Although the group has started work, some academic slots are still to be filled. I have a list of about 15 or 16 people from the full range of people involved with the circus working group. I will make sure that a detailed note is provided immediately after Report stage.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that. From the tone of my reply, he will gather that I am still not fully satisfied and that I expect to bring the matter back at Third Reading for the reasons I have given. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer: moved Amendment No. 6:
	After Clause 8, insert the following new clause-
	"GAME BIRDS
	(1) The Secretary of State shall, by regulations, establish a code of practice for the keeping of game birds within 18 months of the day on which this Act is passed.
	(2) The code shall specify for different species of game bird-
	(a) a minimum spacing requirement per bird for enclosures in which any game bird is kept for the purpose of producing eggs, (b) a maximum length of time for which game birds are to be kept in a laying pen, and (c) a minimum spacing requirement per bird for enclosure in which any game bird is kept for purposes other than producing eggs."

Baroness Miller of Chilthorne Domer: My Lords, this amendment concerns an entirely different area of animal keeping and I return to the keeping of game birds for egg production, which I raised in Committee. As I explained then, I am of course aware that there are strict regulations in place specifying the minimum size of cages for chickens for egg-laying production. The European prohibition of conventional battery cages for egg-laying hens is due to come into force in 2012, under Council Directive 1999/74. However, there are no binding specifications for cages for game birds. Although these birds are brought in from the wild and then kept for egg production—albeit for a limited period—there is still no reason why there should be such a double standard for the conditions in which they are kept.
	When I raised this issue in Committee, the noble Baroness, Lady Farrington, said:
	"We share the concerns of the League Against Cruel Sports, Animal Aid and the British Association for Shooting and Conservation over the use of caged systems, and want to ensure that anything used to house game birds provides appropriate welfare for the birds".—[Official Report, 24/5/06; col. GC 214.]
	I thank her for that statement. I am sure that the Minister and his team will have had further discussions about this issue and I hope that a statement will be forthcoming today. If welfare is at the core of the Bill at Clause 9 but the battery cages for game birds fail to meet its requirements on several counts, it would be very unfortunate.
	Here again we are slightly in the territory that lies between what is a farmed animal and what is a wild animal. For example, the normal behaviour patterns in pheasants include flight and running territorially and, obviously, those are all severely curtailed by cages. Pain, injury, disease and suffering are all the more likely in battery cages and all kinds of abnormal behaviour might be caused by them.
	I have slightly adapted the amendment I tabled in Committee so that Amendment No. 6 is more in line with the wishes of the noble Duke, the Duke of Montrose. He said in Committee that I was trying to put something specific in the Bill and that,
	"if by doing so she is ensuring that government powers are to be circumscribed in this area, on these Benches we would have rather more sympathy with that effort".—[Official Report, 24/5/06; col. GC 213.]
	I hope that the amendment will now satisfy a little more the requirements of the noble Duke.
	I have tabled the amendment so that I might ask the Minister some very specific questions in order to throw light on his discussions on this very important topic. Has his department looked at the Danish law on minimum spacing for game birds in egg production? Can he confirm that the last outbreak of Newcastle disease in the south of England was from caged birds? How many game farmers who use cages are not members of the Game Farmers' Association? Which does he think is the better system—open flock pens or battery cages? Will he rule out reference to the Farm Animal Welfare Council by the working group as, of course, game birds do not count as farmed animals? What information does he have on the length of time partridges are kept in cages? Can he confirm that the only motive for using battery cages is to reduce costs for game farmers and the large commercial shoots?
	As to that last point, most shoots of course do not use battery cages; most are small businesses using traditional practices and manage the land to the great benefit of biodiversity. I am not addressing here the vast majority of the shooting industry, which I think both economically and environmentally brings large benefits to the countryside; I am addressing only a handful of very large egg producers using battery cages. If that practice spreads, it is likely to bring the industry into disrepute. I beg to move.

The Duke of Montrose: My Lords, as the noble Baroness, Lady Miller of Chilthorne Domer, said, we considered this issue in Grand Committee. I think that this amendment has a little more scope to it than the previous one. It does not try to comprehend all that could be included in a code of conduct and allows flexibility for different norms for different species, but, once again, perhaps we are in danger of overlooking the overall quality of the environment.
	I take a slightly different view from the noble Baroness on the question of the drawing up of a code of conduct. I would like to ask the Minister whether the department has already taken up the suggestion of the Game Conservancy Trust to view the possibility of a code with the Farm Animal Welfare Council because it does have some experience in the welfare of animals and what could be drawn up in that regard. The code will also have to include all the latest available research. In that regard, the Minister's view that most of this could be contained in secondary legislation is probably correct.

Lord Christopher: My Lords, I acknowledge that it is important to distinguish between what I will call "traditional" shoots and those which have grown up very largely around large cities, particularly London, which appear to be very little more than live shooting practice. In Committee I said that the scale of some of these establishments is such that there is literally no market for what is shot, and the birds are buried in large numbers. There is no evidence, although a photograph has been produced. I wonder whether my noble friend has been able to establish the truth of this.
	The amendment does not cover my next point, although there is no real reason why it should in the context of what the noble Baroness said. I am not sure whether raising pheasants and partridge in cages is exclusively linked to cost, although cost is clearly a factor, or whether it is linked to the necessity of some of the shoots I am describing to maximise the number of guns, which could produce some results for the man or woman who is shooting. I read a suggestion from the shooting fraternity that, according to acreage and the rest of it, there should be a limit on the number of guns allowed so that the shoot does not simply provide live shooting practice.

The Earl of Onslow: My Lords, I declare an enormous interest in that I run a shoot 10 days a year, and we put down quite a large number of birds. The last outbreak of Newcastle disease was about a mile and a half from where I live. I am pretty certain, although I would not go to the stake for it, that the outbreak occurred after six week-old poults had been bought because, if I remember rightly, it was in July. It was dealt with immensely efficiently by the landowner, his keeper and Defra, and the disease did not spread. Well done Defra—one should give credit where it is due.
	I have heard the story about pheasants being buried; it has been around for a very long time. I am pretty certain it is an urban myth. Someone says, "I wonder if they do" and by teatime it has become, "I know the chap who did it". I have heard that story for 10 years now and have seen no evidence, although I know you cannot prove a negative.
	It is certainly true that the price of pheasants has gone through the floor. I took over my father's shoot 30 years ago; we got £1 for each pheasant in the middle of the season then, and we still get £1 each, if we are lucky, in the middle of the season. That is due to the fact that the bags have increased, as the noble Lord says. But I think that the majority of people rear their pheasants as I do. The laying pens are a big area, and bushes are brought in for the birds to hide under. There is protection from, funnily enough, sparrow hawks; it is perfectly legal, they are scared away with netting. It is in everybody's interests that the laying pens are as decently run as possible and free of disease.
	If there is proved to be a need for regulations for people using battery methods, I can see nothing wrong with that. If we want to go on running shoots, we have to do it properly and in a way that everybody can approve. If the need is shown to be there, I see nothing wrong in having regulations for minimum standards.

Lord Kimball: My Lords, I should declare an interest as the deputy president of the Countryside Alliance. I shall declare an interest also as the first chairman of the British Greyhound Racing Fund when we come to consider those matters.
	This amendment is quite unnecessary. Defra is already drawing up a code which covers the rearing of game birds. It will take advice from the Game Conservancy Trust. I have great confidence that it will come up with the right answer. However, this amendment is quite unnecessary and comes at the wrong time. It will make it harder for Defra to come up with the right solution.

Lord Rooker: My Lords, this is another area in which I can report modest progress to the House. Under the previous timetable for regulations and codes, no commitment whatever was made for game birds, whereas a commitment now exists for a code of practice by the end of 2009. That is a direct result of pressure from your Lordships' Grand Committee.
	I have not seen the photographs to which my noble friend Lord Christopher referred, so I do not know whether, as the noble Earl said, it is an urban myth—it could well be so. An astonishing number of birds is released each year. The figure is between 20 million and 35 million. Around 40 per cent of pheasants for rearing come from France as eggs or day-old chicks. There is a small trade in six-to-eight-week-old poults. Approximately 90 per cent of redleg partridge are imported, the majority from France, but some also from Spain and Poland. The question of rearing practices for birds released as game birds therefore goes outside the country. I hope that my update is to the noble Baroness's satisfaction: the Government have looked at this issue closely since Grand Committee.
	We are sympathetic towards the purpose of the amendment—there is no question about that—but it is a mistake to insert the new clause simply because it is too inflexible. We intend to introduce a code of practice for game bird-rearing within the next two years, but to require it to be established within 18 months of the enactment of the Bill will certainly pre-empt the results of the game bird research which has been commissioned by Defra to inform the code. We want the code to be based on evidence.
	There is little scientific evidence about what is required for good game bird welfare, including minimum space requirements, but the Game Conservancy Trust is conducting research into the use of certain practices as management tools. As the noble Earl, Lord Peel, indicated in Grand Committee, the Farm Animal Welfare Council intends to study the breeding and rearing of game birds, including the use of the raised laying units to which reference was made. It will report back to us in the summer of 2008. Those results will be far too close to the 18-month deadline set by the amendment to enable us to draft the code.
	In some ways, the noble Earl, Lord Onslow, hit the nail on the head. The code is needed. While there might be a shortage of scientific evidence, a lot of good practical knowledge exists about welfare in rearing game birds. We are talking about a scale of release of between 20 million and 35 million and a large expansion in production, as clearly indicated by the price going through the floor. Game birds are more widely available in butchers' shops than was the case when most of us were a lot younger. Certainly, people on my side of the road could not afford them.

The Earl of Onslow: You just nicked them.

Lord Rooker: My Lords, I shall ignore that remark. We intend to set up a working group before the end of the year, with the objective of producing the code in 2008. We hope that these two pieces of work—the working group and the work from the Farm Animal Welfare Council—will inform the overall code to your Lordships' satisfaction. We do not want to pre-empt it.
	I realise that the amendment has two parts—but the thing that kills the amendment off is the prescriptive detail of the timetable, which would completely wreck what we propose to do with the necessary outside interests to bring matters to a satisfactory conclusion.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that overall very positive reply. Since the start of the Bill, as he has explained, Defra has concentrated on this issue, thought much further about it and now has a date to propose. However, he did not answer my specific question whether the Farm Animal Welfare Council was the suitable place to discuss this matter. I do not believe that pheasants fall into the category of farm animals—

Lord Rooker: My Lords, I realise that in some ways I did not answer any of the noble Baroness's questions. I have two specific answers. First, we will consider all the information available, including the Danish legislation to which she referred. Secondly, the Newcastle disease occurred in pheasant poults being reared for release and not in laying birds. The birds were already in release pens when the presence of the disease was recognised. I think that that confirms what the noble Earl said.
	I thought that I had answered the point about the Farm Animal Welfare Council. There are two tracks for dealing with this: the council is working on the issue, while we are setting up a committee to help to draft and inform the code before the end of the year.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister. Overall, I believe that we have reached a very positive place with the amendment and the Minister's answer to it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 9 [Duty of person responsible for animal to ensure welfare]:

Baroness Miller of Chilthorne Domer: moved Amendment No. 7:
	Page 7, line 13, at end insert-
	"( ) For the purposes of identifying an animal's needs under subsections (1) and (2), the degree of domestication of the animal concerned shall be taken into account."

Baroness Miller of Chilthorne Domer: My Lords, I apologise that my three amendments have come in a row. I hope your Lordships are not bored with hearing my voice yet.
	This amendment goes to the very heart of how we believe the Bill will either be a success and produce really adequate tools when the Government produce the various codes on which it will rely or be inadequately drafted and therefore not able to do that.
	The amendment seeks further to define under Clause 9 the sort of animal that is being dealt with when, for example, taking into account the need for a suitable environment. In debating Amendment No. A1 we made passing reference to degrees of domestication. Where the animal is a long-time domestic companion to man, such as a cat or a dog, it is fairly easy to judge whether its needs are met against all the criteria in the clause. We are used to their needs, which have been known over time, and it will be clear when somebody is failing to provide a suitable diet or environment, for example. However, at the other end of the spectrum are those animals that have never fallen within the definition of "domesticated" and might be wild, caught animals. We debated in Committee the issues of wild, caught birds and of primates. The needs of those creatures will be vastly different.
	In Committee the Minister did not seem to accept the need for any differentiation. Having thought about the issue and worked on it over time, I believe much more strongly than I did that this amendment is absolutely essential to the adequate functioning of the Bill. My amendment will ensure that in the codes for non-domesticated species that are kept as pets—we have not been offered codes for them in the Bill—the fact that they are essentially wild or semi-domesticated animals will have to be taken into account.
	An episode that highlighted this vital distinction for me was when the Minister's team of advisers was debating this issue with, I believe, the RSPCA. One of the team commented that there was no difference in welfare needs between domesticated horses and zebras. Self-evidently, there is a difference. Zebras have never been used to domestication of any sort. They have not been selected for generations to be comfortable with human company. Their needs under the five freedoms, especially the need to exhibit natural behaviours, will therefore be much more difficult to satisfy in a domestic setting than, say, those of a horse.
	My amendment does not say that domestication should be the only consideration for welfare needs—far from it. But there is a growing body of scientific backing to suggest that the needs of non-domesticated species will be different in type and/or scale from those of domesticated animals. For example, in 2002, data produced by Mr Edward Price pointed to the conclusion that the most important effect of domestication on behaviour is reduced emotional reactivity or responsiveness to fear-invoking stimuli—that is in scientific-speak. Evidently, if one has small children banging their drums, the family dog is unlikely to react because it is probably pretty used to it. However, if a fairly fragile animal has recently been imported into the household from essentially a wild background, it certainly will react. It will not have the room to flee from what it finds a frightening situation, therefore the requirement under Clause 9 to provide "a suitable environment" will not be met.
	The needs of African grey parrots are substantially greater than those of most domesticated species; for example, budgerigars. A parrot in captivity is routinely denied two of its most fundamental natural behaviours: flying long distances and socialisation. Research by Engbretson published this year by the Universities Federation for Animal Welfare suggests that denying a bird vocal, visual and physical contact with its conspecifics can contribute to abnormal behaviour and stereotypy. These birds normally congregate in large flocks.
	You can see that I am no scientist, but the point I am getting at is that no amount of human contact can make up for the fact that these animals are being denied their normal behaviour, and therefore their needs would be unlikely to be met under Clause 9 if you could take into account the degree of domestication, because it is a key concept in assessing suitability of environment. Indeed, the concept of domestication has very helpfully already been detailed in the guidance notes to the 2002 amendment to the Zoo Licensing Act 1981, so the Government have already considered the question of degree. Five categories are set out, ranging from true domestic breeds to true wild species. The work has been done on this. It is not as if the Government have to start from scratch; they have definitions they can choose to use.
	The Bill is not an exercise in artistic draftsmanship, and those who come to interpret it really need to be able to appreciate and put into practice the difference in the standard of care required by best practice to cater particularly for non-domesticated species. Noble Lords who were here for the discussion in Committee on the keeping of primates as pets, for example, will have appreciated it. I will not rehearse any of the arguments I used then, because of course we are on Report. All I am asking the Government to do now is to recognise that there will have to be a very careful interpretation of the Bill and to protect those most vulnerable animals that I believe they are as interested in protecting as I am. I beg to move.

Baroness Byford: My Lords, I also spoke on this issue in Committee, when we discussed in depth caught wild birds and primates. While I have sympathy with the ethos behind the amendment, it seems to me that paragraphs (a),(b),(c),(d) and (e) of Clause 9(2) would cover the matter. Surely anybody having to decide on the matter would know very well that a primate's needs and a parrot's needs are very different from those of other animals which are normally domesticated. The noble Baroness shakes her head. I shall be interested to hear what the Minister has to say. I still have strong reservations about caught wild birds, which are not dealt with specifically here but, unless the Minister tells me otherwise, I should have thought that paragraphs (a) to (e) covered the matter.

Lord Rooker: My Lords, I confirm that that is the case. I assure the noble Baroness that we consider the matter to be covered by the Bill. As we have not convinced the noble Baroness, Lady Miller of Chilthorne Domer, before I use my set piece I shall address the seductive point that she raised regarding the Zoo Licensing Act, on which I have taken advice.
	The noble Baroness said that the Zoo Licensing Act provided a list of domesticated and non-domesticated animals. This list, however, is not an authoritative statement. The guidance is explicit—the list is the department's informal view of what animals might be classed as wild animals for the purpose of the Zoo Licensing Act 1981 (as amended). Under this legislation "wild animals" means animals not normally domesticated in Great Britain. It was felt necessary to provide this guidance to aid authorities in determining what types of establishment might require a zoo licence under the 1981 Act. For example, a collection of animals consisting entirely of types normally domesticated in Great Britain is not a zoo within the meaning of the Act. This list was not drawn up to highlight welfare differences between the species mentioned. Indeed, the Secretary of State's Standards of Modern Zoo Practice guidance is equally clear that the welfare needs of animals in zoos can be met by adhering to the five freedoms drawn up for livestock by the Farm Animal Welfare Council, which are broadly reflected in the five welfare needs as highlighted in this clause.
	The amendment would add a further paragraph to Clause 9. Its central aim is to instruct a court that in considering whether a welfare offence has been committed it should have regard to the degree of domestication of an animal. We do not think that the amendment is necessary because these issues will be dealt with by a court as appropriate under the legislation as drafted.
	The special needs of some animals kept by man were discussed at length in Grand Committee. We were all agreed that different animals have different needs and therefore required different kinds and degrees of care. We also debated amendments that sought to instruct the courts to take into account whether an animal was non-domesticated. I confirm to one noble Baroness and reassure the other that whether an animal is of a kind commonly regarded as domesticated or non-domesticated will be an inherent consideration in ascertaining what its needs are under Clause 9(2), for the purpose of determining whether its needs have been met. It is entirely appropriate for a court to take that into account.
	It would be unacceptable to seek to ascertain a non-domesticated animal's needs without having regard to the fact that they are of a species that is not commonly domesticated in the British islands, where this is relevant. However, it will not always be relevant, and it could therefore be a mistake to require a court always to have regard to it. For example, if a prosecution was brought because an owner failed to provide water for their animal, the amendment would require the degree of domestication of the animal to be taken into account, even though that is not relevant. All animals need water, and a failure to provide water for an animal for which you are responsible would breach the offence, whether or not the animal is domesticated. To this extent, the amendment could cause confusion and legally be a problem. I assure the House that the clause as drafted does allow the courts to contemplate "degrees of domestication"—it is for the court to decide—as one of the circumstances in deciding whether the offence has been breached.
	By highlighting the degree of domestication, the amendment risks narrowing the clause by implication, because that factor and not others is mentioned. There is potentially a really serious problem in limiting the clause in this way. It should also not be assumed that non-domesticated species necessarily have more complex needs than domesticated species; they are clearly different. The regulations and codes of practice that we produce will provide greater clarity about what is required for particular types of animal, including non-domesticated species. The codes will provide, if necessary, any additional guidance that may be needed to ensure the welfare of non-domesticated animals.
	If necessary, there is a power in Clause 12 to make regulations setting specific requirements with regard to a particular animal's needs, so it is covered in the Bill in a double lock. Clause 9 makes it implicit and inherent that the needs will be taken into account by the courts. In Clause 12, there is the power to make regulations setting a specific requirement with regard to a particular animal's needs. What exactly constitutes the appropriate welfare standard will vary according to the circumstances, and the Bill already requires the courts to consider all the circumstances.
	After careful consideration and scrutiny by Parliament, we have formulated a clause that is as flexible and as capable as possible of addressing the needs of all types of animals—we are concerned about them all—for which a person may be responsible in the many different circumstances that may arise. The flexibility is needed for the courts to do their job so that, if you like, those who wish not to treat animals properly cannot find legalistic loopholes in a clause that is drafted a bit too narrowly because it does not allow the courts to look at all the circumstances. On that basis, I sincerely urge the noble Baroness to withdraw her amendment.

Baroness Miller of Chilthorne Domer: My Lords, naturally, I am disappointed by the Minister's reply. I took very much to heart last year the words of one of his predecessors at Defra, Mr Jim Knight, who in talking about the importation of wild birds, said that the Government needed to "raise the bar" on the standards that had to be met. The Minister has given the perhaps slightly disingenuous example of whether water was supplied. The question of a suitable environment or the need to exhibit normal behaviour patterns would have been a much fairer example with which to reply. The response of the noble Baroness, Lady Byford, surprises me, because her colleague in another place, Mr Jim Paice, has been extremely vociferous about the issue of wild caught birds, and he would have felt very strongly about supporting the spirit of the amendment.
	Of course, the Minister may say that the way in which the amendment is drafted would weaken the clause, but it was open to him to bring forward something that his experts might have found more suitable. I think he is saying that he finds the whole concept unnecessary and unsuitable.

Lord Rooker: No, my Lords, that is an unfair description of what I said and is not accurate. We have drafted the clause to meet the widest number of circumstances, so that a court—I repeat, a court—can take into account all the relevant circumstances of the animal, whatever its level of domestication. That is important. Anything that narrowed the clause would diminish that; so her description was the opposite of the case that I was making.

Baroness Byford: My Lords, before the noble Baroness continues her reply, in my comments on her amendment, I repeated that we had grave concerns about caught wild birds and those concerns have not gone away; but it is a question of how you then deal with them. I told her that, on reflection, our view was, having raised this matter two or three times and given that it has been recorded in Hansard, that the Government are well aware of the issue and will provide specific direction to local government and the courts. I would like to see—

Baroness Farrington of Ribbleton: My Lords—

Baroness Byford: My Lords, I am sorry but I am replying to the noble Baroness. Am I not allowed to?

Baroness Farrington of Ribbleton: My Lords, I have allowed there to be as much flexibility as the Government normally allow on such an issue. We are away. The noble Baroness, Lady Miller, was replying to the debate on her amendment. Only she may speak after the Minister. I direct that remark to both sides of the House.

Earl Ferrers: My Lords, perhaps I misheard the noble Baroness, Lady Farrington, but did she say that that was more than the normal time allowed by the Government? If so, she was in error, because it is a matter of what Parliament allows.

Baroness Farrington of Ribbleton: My Lords, the noble Earl either misunderstood me or I expressed myself badly. I drew attention to both Front Benches who have intervened when the noble Baroness was the only Member who should have been speaking.

Baroness Byford: My Lords, perhaps I may speak briefly and I will not be incorrect again. I just wish to say that if a point is raised by a fellow Peer which misleads the House, I thought that it was possible to correct that.

Baroness Miller of Chilthorne Domer: My Lords, procedure apart, I apologise if any Member of the House feels that I have been misleading in any way. I was simply attempting to express the views on this issue of various colleagues in this House and in another place.
	However, I am not so insensitive that I do not realise that the amendment has not received the degree of support that I would have hoped for. That is disappointing, as it will be, too, to the Animal Protection Agency, which stated:
	"It is unfortunate that many people, including policy-makers, often fail to recognise that while some animals, like dogs and cattle are highly adaptable",
	others are not. The agency vociferously supported the amendment. I heard what the Minister said about it being a matter for the court to judge, but it is also for the Government, in drawing up the codes, to have this guidance in place. That was what my amendment attempted to do.
	I shall not waste the time of the House in testing its opinion, because it is clearly not with me and, therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Pendry: moved Amendment No. 8:
	Page 7, line 19, at end insert-
	"( ) Nothing in this section applies to the offering of a goldfish as a prize."

Lord Pendry: My Lords, on the face of it, this amendment may seem frivolous, but I assure noble Lords that that is far from the case, as many youngsters up and down the country would testify. The three of us who have tabled the amendment are all members of the All-Party Group on Fairs and Showgrounds and we work closely with the Showmen's Guild of Great Britain, a responsible body that represents more than 20,000 people in that profession. I know that it is fully behind the objectives of this amendment, which is designed to combat the purpose of the original amendment tabled in Committee by the noble Baroness, Lady Miller of Chilthorne Domer.
	In Committee, I related my experience of winning a goldfish as a schoolboy at the Merrie England amusement arcade in Ramsgate. The fish was well looked after until it died, which was, I should tell noble Lords, from natural causes. Before that happened, the fish brought great joy not only to me, but to my brothers and sister. I know from correspondence that I have received since the Committee stage that my sentiments and those of the noble Lords, Lord Bilston and Lord Hoyle, are shared by many hundreds of people in this country.
	I said in Committee that the amendment then proposed by the noble Baroness, Lady Miller of Chilthorne Domer, went over the top. At the end of our debate, she withdrew her amendment on the grounds, I hope, of the strength of our arguments, particularly that of the noble Lord, Lord Hoyle—unfortunately, he cannot be here today, as he is stuck in a traffic jam—who requested that we should return to this issue on Report with a suitable amendment. That is where we are today.
	I sincerely hope that sense will prevail and that the practice of allowing goldfish to be won as prizes will continue. The Showmen's Guild of Great Britain has taken measures to ensure that anyone who wins a goldfish as a prize is presented with a leaflet drawn up by the RSPCA and headed "Care of Goldfish", which provides advice on how to care for the fish. The RSPCA is surely the kind of body that this House should listen to, alongside my noble friends and me. I beg to move.

The Duke of Montrose: My Lords, I shall speak to Amendments Nos. 11 and 12, in my name and that of my noble friend Lady Byford, which are grouped with this amendment.
	Clause 11 sets out to regulate the transfer of animals to those under 16 through selling them or offering them as prizes. Subsection (3) specifically outlaws the making of an arrangement by which someone who is reasonably believed to be under 16 is given a chance to win an animal as a prize. Subsection (5), however, excludes an arrangement made in the absence of the potential prize-winner, provided that the party offering the prize has reasonable cause to believe that a responsible adult agrees to the arrangement.
	The idea of offering an animal as a prize to someone whom one has not seen and whose circumstances one does not know is abhorrent to most people—and even goldfish have come in for a tide of sympathy recently, although, as the noble Lord, Lord Pendry, has shown us, there are good arguments for defending the practice. In Committee, the Minister referred to the sorts of competition that, for example, are run in a horse magazine to win a pony. As I said, offering a sentient being as a prize to a person whom one has not met and about whose circumstances one has no knowledge, but who one has reason to believe is under 16, is not acceptable to many or, I hope, most people.
	If a magazine were to do that, the likelihood is that there would be a written entry containing a name and address so that a responsible competition manager would be able to check with an adult before dispatching the animal, whether by courier or in a horsebox. On the internet, however, things are not so black and white, and any Bill concerned with animal welfare must be framed to take account of the more modern ways in which all sorts of deals are struck. By what means will a competition ensure that a child who posts a winning entry has the permission of a responsible adult to accept the prize?
	The Minister continued his response in Committee by saying:
	"Those under 16 should not be able to win such competitions unless they have the consent of a responsible adult".—[Official Report, 24/5/06; GC 241.]
	That is my point entirely. However, he did not enlighten us about how, over the internet, such a possibility would be outlawed and the award of the animals monitored.

The Earl of Onslow: My Lords, I agree that there should be some control over who should win prizes. In 1948, I won a goat in a raffle and it was sent to the Guildford market the next day. I suspect that, instead of grazing happily in one of my father's fields, it ended up on a curry shop table. That is my only contribution on this clause.

Baroness Miller of Chilthorne Domer: My Lords, our debate about goldfish in Committee allowed us to have some heated debate and some lighter moments.
	This amendment would allow a person to completely disregard welfare when offering a goldfish as a prize. Effectively, it sets aside the core values of the Bill for one species chosen arbitrarily simply because of the fond memories held by some Members of your Lordships' House. I understand how they have managed to be very persuasive but, ultimately, the opinion of the scientists who have worked on the Bill, and whom the Minister has been very ready to quote to me this afternoon, is that vertebrate animals, including goldfish, are demonstrably sentient. We on these Benches do not feel that it would be consistent to go against that advice, however much some Members may feel us to be killjoys.
	I look forward to hearing the Minister's response to the amendments tabled from the Conservative Benches, which I thought raised some interesting issues.

Lord Bilston: My Lords, I had hoped that the noble Baroness, Lady Miller, would have been persuaded by the very powerful arguments that we advanced in Committee with regard to goldfish. Again, I acknowledge, as I am sure all noble Lords do, that the welfare issue goes wider than simply in relation to goldfish. I felt that we made a good case about both the welfare and employment elements relating to goldfish. We pointed out then, as I point out again to noble Lords today, that more than 20,000 people are employed at funfairs and through the Showmen's Guild of Great Britain. I am not saying that all their jobs would be in jeopardy but, if it were decided to ban goldfish as prizes at fairgrounds, there is no doubt that some would be. If the case were made that the welfare considerations were enormous, then we would have to accept the loss of those jobs, but, as we sought to point out to the noble Baroness, Lady Miller, and as I hope to point out to the House today, there are no serious welfare issues with regard to goldfish.
	As I pointed out in Committee, it is 50 years since the Showmen's Guild of Great Britain passed a resolution to its constitution ensuring that all its members took account of the welfare of goldfish. It includes keeping them in a suitable container and passing them on to a winning competitor also in an appropriate container. That duty of care is enshrined in the guild's constitution. In addition, every time a goldfish is awarded, the winner is given a copy of a leaflet headed "Care of Goldfish", drawn up especially by the RSPCA. The leaflet details how to care properly for the goldfish and how to provide it with a proper home. The appropriate container also carries that advice.
	It is part of the tradition and culture of showgrounds for goldfish to be offered as prizes. Today, I hope that we can still satisfy noble Lords, as the Minister satisfied Members in Committee, that there are no real safety issues. I can understand the noble Baroness being concerned that children may not take care of the goldfish, but I am sure that there are not many noble Lords here today who did not, in their childhood, win a goldfish and care for it. I did. Many of my school friends had a goldfish and we always took great care to make sure that its health and welfare was paramount. I hope to hear from my noble friend that we should not be over-concerned and over-anxious about goldfish being offered as prizes, and allow that to continue in the interests of our traditional culture and the important jobs lying behind that effort.

Lord Rooker: My Lords, I am on the side of the goldfish. Our tradition of giving goldfish as prizes at funfairs will and should continue. We are doing nothing in the Bill to abolish it. We are on the side of the funfairs giving goldfish as prizes, to be looked after well—in bigger bags, maybe. The containers are much better now than they were in the past. The leaflet is crucial; giving it with the prize is absolutely fundamental. It is important that the welfare of the goldfish is taken into account. It is not a question of do what you like. I do not think the Showmen's Guild would support any of its members promoting anti-welfare practices by offering unsuitable containers and not giving good advice to the youngsters who win the prizes. Long may that continue.
	There is a technical difficulty. If the amendment were accepted, it would mean double standards. They would be lower in funfairs than in pet shops. But there is no issue as long as the welfare of the goldfish is considered. No offence will be committed, so the tradition can continue, and there is nothing in the Bill knocking that out. I do not see it as a problem, but I am grateful to my noble friends for raising the issue today and in Grand Committee. As I told my noble friend Lord Bilston the other day, officials in my private office in Defra still talk about the debate we had in Grand Committee. They remember the day with joy. I hope that that will be acceptable to my noble friends.
	This issue and Amendments Nos. 11 and 12 have already been debated. Amendment No. 11 would remove subsection (5)(a), which covers competitions that are not held face-to-face but which are in magazines, such as horse magazines, or over the internet. These competitions are often aimed at a section of the public who already have some knowledge of the animal that they are attempting to win and are therefore likely to prove responsible owners. Subsection (5)(a) makes provision for those types of competitions. We believe that the amendment would make their legality uncertain and could effectively prohibit them, which we are not in favour of doing.
	We are not aware of any welfare problems with this type of competition. One that we have seen in a popular horse magazine promoted welfare as it tested a child's knowledge of horse matters, including horse care. Subsection (5)(b) ensures that the person offering the magazine prize has reasonable cause to believe that a child under 16 who enters the competition has sought agreement from their parent or guardian. This safeguard is present in existing magazine competitions in that the application requires parental endorsement. The effect of the amendment would leave subsection (5)(b) as a stand-alone provision that could, for example, be applied to a stallholder at a funfair. In many cases, it would be totally unreasonable for the stallholder offering fish as a prize to know whether or not the parent or guardian is content for the child to win the goldfish. It would therefore be a backdoor method of trying to impose a total ban on giving pets as prizes. That is why some noble Lords thought that there was an attempt by the original promoters of the amendment to be anti-goldfish.
	On Amendment No. 12, the purpose of subsection (6) is to allow a prize to be offered in a family context; given, for example, by one family member to another as a reward or prize. The term "family" may refer to a relative but each situation can be different depending on individual circumstances. It could also be taken to include a partner of a child's parent. We have not restricted ourselves in defining "family", as this term will need to cover a range of situations. In most cases, it will be obvious where the term should be applied.
	There is no justification for the state to interfere in harmless arrangements between family members, especially where the person held legally responsible for the care of the animal on the child's behalf will, in most cases, be aware of the arrangements and have to have taken responsibility for ensuring that the welfare needs of the animals will be met. It is not a free-for-all just because it is a family. That is crucial. The welfare needs of the animal must still be met.

Lord Pendry: My Lords, I thank the Minister for that reply. I am pleased that people in his office are still talking about the heated debate that we had in Committee.
	My noble friend Lord Bilston and I are somewhat disappointed that the noble Baroness, Lady Miller, did not follow on from what we thought was a slight retreat from her original position. We know from all her other amendments that her heart is in the right place, but that is not quite the position on this issue. In view of the Minister's positive response, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 10 [Improvement notices]:

Baroness Byford: moved Amendment No. 9:
	Page 7, line 43, at end insert-
	"( ) An inspector may amend an improvement notice."

Baroness Byford: My Lords, the amendment deals with inspectors and where an improvement notice might be added. It would enable an inspector to amend an improvement notice. It is intended to allow mistakes from simple drafting errors or errors of description to be corrected. Allowing the amendment of an improvement notice will reap benefits for the continued monitoring of animal welfare. It would ensure that, where there was a need to extend coverage of an improvement notice, that could be done by amending the notice.
	At one stage, I was lobbied and asked whether I would agree to the cancelling of an improvement notice. I was unhappy with that, because the improvement notice gives people time to correct errors in the treatment of that particular animal, and make whatever improvements they should be capable of. In discussion with various groups, particularly the International League for the Protection of Horses, we came up with this amendment to allow an improvement notice to be amended but not withdrawn. One would therefore be transposed with the other: we did not want a cancellation.
	As I said, the amendment would permit the correction of errors where, for example, the name of the owner is cited incorrectly or the opinion of a veterinary surgeon raises the need to redefine the description of harm. That can be done without the expense of producing another improvement notice.
	The amendment is specifically drafted so that it will not be possible to cancel the improvement notice. Doing so could obstruct the purpose of the notice. My noble friend Lord Soulsby, who unfortunately cannot be with us today, tabled an amendment that would have made non-compliance with an improvement notice an offence. Our original amendment—then Amendment No. 47—would have allowed the recipient to make an appeal on an improvement notice. I was satisfied at that stage with the Minister's response but the ILPH has since raised these concerns with me. When the Minister responds, he may also be able to help the House on a case which I brought to him earlier in the year—that of Mrs Diane McCluskey, who found abandoned horses and had great difficulty in having the matter resolved.
	The International League for the Protection of Horses is very supportive of the Bill and of how it provides a means of avoiding abuse and cruelty to animals and increasing the penalties for those who contravene the law. During the Bill's passage through the House of Commons some important and welcome improvements were made; so there are very few issues on which further amendments are needed. However, one issue remaining is improvement notices and the ownership of abandoned animals. This small amendment will improve the Bill. The RSPCA has had cases where an original improvement notice has proved faulty and needed to be amended but it could not be. It therefore seems sensible to raise the issue at this stage and to hear the Government's response. I beg to move.

Lord Higgins: My Lords, it seems a very long time since Second Reading when my noble friend and I raised this issue. There is scope here for—dare one say it?—improving the improvement procedure. It would be helpful if the Minister would indicate whether he feels that this would be helpful and say whether it would enable cancellation to take place.

Lord Donoughue: My Lords, I am a trustee of the International League for the Protection of Horses and can confirm that the league gives great support to the Bill, particularly this amendment, for the reasons that the noble Baroness gave.

Lord Rooker: My Lords, I did not know until I came to the Bill that Clause 10, to which the amendment relates, was introduced in the Commons in response to an opposition proposal that those accused of an offence should be told in a statutory improvement notice how they were breaking the law and what they needed to do to avoid being taken to court. We think that Clause 10 achieves that. However, I am quite happy to take advice on that, because I need to be absolutely clear that our views across the Chamber and among outside bodies are at one.
	We do not think it is necessary to say anything about the matter in Clause 10 specifically. If a notice is issued that does not specify the right steps necessary to comply with the welfare duty, there is nothing in the legislation to prevent the inspector issuing a new corrected notice. I am advised that if the owner says that he will follow the original notice, he is not complying with the welfare duty. The owner is obliged to comply with the corrected notice or there will be a breach of the welfare duty for which the owner could be prosecuted. There is nothing stopping an inspector issuing a new notice to supersede the first one and that is the notice with which the owner of the animal would have to comply. We are satisfied that for all practical purposes the clause as drafted does the trick.
	There is an incredibly short time between Report and Third Reading, but, bearing in mind what has been said from both sides of the House, I will make sure that we have this matter locked down before Third Reading. So if there is any doubt whatever, we will have a look at this again. The advice I have is that this amendment is not necessary. The inspector can issue a new notice with which the owner will be required to comply or face prosecution. Obviously, it is right that inspectors take care to ensure that the first notice that they issue covers all the points, but, if not, they can issue another notice. There is nothing to stop them doing that.

Baroness Byford: My Lords, I am grateful to the Minister and to noble Lords who have supported the amendment. This matter has arisen in the past and is perhaps not of concern now, but it was raised with me not just by the International League for the Protection of Horses but by the RSPCA, which has said that it has put forward some cases in which the improvement notice has then been found not to be sufficient for the matter to go to court. I am grateful for the Minister's offer to look at the matter again. I do not have the details in black and white in front of me here, but it was raised by two representatives who I think have a very good record in these matters.
	Having taken into consideration what the Minister has had to say, I highlight the question of how one knows when one notice ends and another begins. Presumably, one would be trying to improve on notice A. How will the person know when notice A is no longer applicable, because notice B has come along and altered it? There is a three-month period in the Bill to improve on the notice before any court action can take place.

Lord Rooker: My Lords, I will include that question in the advice that I receive but, as I said, there is nothing stopping an inspector issuing a new corrected notice on a different date—or, if, for some reason, they are issued on the same day, the inspector would time the second notice. The latest notice would be the one to which the person would have had to operate or be subject to prosecution. I will check that out and also write to the noble Baroness on the McCluskey case, concerning horses, that she mentioned.

Baroness Byford: My Lords, with that helpful answer, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford: moved Amendment No. 10:
	After Clause 10, insert the following new clause-
	"GREYHOUND WELFARE
	(1) The appropriate national authority shall provide regulations under section 12 to introduce licensing of all racing greyhounds' tracks within two years of the day on which this Act is passed.
	(2) The appropriate national authority shall issue guidance which provides for-
	(a) independent veterinary attendance at race meetings, (b) welfare protection for retiring racing greyhounds, (c) the identification of greyhounds employed for racing purposes, (d) the licensing of kennels, and (e) the maintenance of tracks."

Baroness Byford: My Lords, this is perhaps the weightiest of all the amendments with which I have to deal today. I am very grateful to the many people who have written to me directly or made comments about the present and future care of greyhounds. If I may, I shall start by thanking all of those—the lobby groups and the professional tracks—for coming back to me. I apologise for the fact that I shall be slightly lengthy, because we need to set the scene.
	Under the amendment, we return to a subject of great concern to me and many other noble Lords. The amendment represents a departure from our position in Committee, where we sought to allow self-regulation of the greyhound tracks to continue but to eliminate non-regulation in the industry by ensuring that the independent tracks signed up to the industry's regulation. The new amendment would ensure that the national regulations were rolled out within two years.
	There have been many developments in the field since Committee, not least the shocking exposé in the Sunday Times last August, in which it was estimated that one man alone had during the past 15 years killed 10,000 retired greyhounds, not letting the owners know what was happening to their hounds—some thinking that they were being rehoused when in fact they were being destroyed. It is not necessary for me to repeat that story; I am sure that many noble Lords have read it. It is one that horrified me and must have horrified other noble Lords.
	In the light of that evidence, and in the light of the Minister's words in Committee, I have revised my position. However, there are serious flaws in the operation of the current system. Where a trainer does not abide by the industry rules as set out by the National Greyhound Racing Club, his licence is revoked. However, there is nothing to prevent that trainer from continuing to train dogs or entering those dogs on independent tracks.
	The self-regulating greyhound industry is beset by conflicting priorities. The built-in conflict between welfare and profit has clearly resulted in the under funding and under-management of the greyhounds' welfare. I accept that the NGRC has acted with the very best of intentions, and that the regulations that it has tried to bring in have helped, but there is still a long way to go. That conflict of interests and, I am sorry to say, the disgraceful lack of co-operation shown by some individuals in the industry make the current situation unworkable. Although I would have been happy to allow the NGRC to regulate the industry if it had proved itself able to keep an accurate audit of retiring greyhounds and to bring independent tracks within the approved industry, I regret that the evidence at this time persuades me that it cannot. However, my amendment would give it two years within which to do so. If the amendment were accepted, and if the industry managed to achieve what it is setting out to do, it may well have urged the industry to look further.
	I understand that the NGRC's rules of racing do not include a section on minimum welfare standards. Although elements of its rule book cover small welfare issues, there is no written code on the welfare of greyhounds. What is more, although betting points and entry fees are well represented, there is no official entry on track surface or layout. The amendment calls for national standards to help to reduce the number of dogs that are bred for racing, thereby reducing so-called wastage from the breeding of unsuitable dogs. It would ensure that veterinary attendance at meetings was mandatory, that there would be an effective and audited identification scheme for greyhounds, that greyhound kennels were licensed and that tracks were kept up to suitable standards for racing.
	I was heartened to read the Minister's words in Grand Committee, where he recognised that,
	"the regulated sector is making strong advances in welfare, but I do not think that anyone is saying that it is perfect".—[Official Report, 24/5/06; col. GC224.]
	That is right, and that is still my view. Great attempts at improving welfare have indeed been made, but the greyhound industry has clearly come far from its starting point. That starting point, however, was far below a reasonable standard of welfare.
	I hope the Minister recognises that my amendment would allow for the continued work of the Defra greyhound welfare working group, as it would allow for regulations to be made, highlight the essential areas for improvement, and allow for a two-year rollout. I was disappointed by the timescale for the work on greyhound welfare, as I was by the entire timeframe for the codes of practice that will come to this House for approval after the Bill has been passed. I also remain far from satisfied that the next instalment will be next April.
	The RSPCA's contribution to us accepts that the Government intend to introduce regulations that will address these concerns, but it would welcome the Minister's confirmation that the regulations will provide scope for inspectors of tracks and trainers' kennels, that the Government will make a commitment to ensuring that the regulation of the industry is open and transparent, and that the public can have faith in it. Self-regulation is not acceptable to the RSPCA's organisations or to the public if the industry fails to do so. The RSPCA also believes that the inspection process should be audited to ensure compliance with procedures and the competency of the inspectors.
	It would be enormously helpful for all of us if, in addition to providing that clarification, the Minister might also consider another couple of items. We believe that additional safeguards need to be touched on. The current working group includes Hazel Bentall, a veterinary steward for the National Greyhound Racing Club. In addition to the points already raised, it would like to include drug testing, regular and random inspection of residential and racing facilities, comprehensive integration of all relevant records and a robust audit to ensure the effectiveness of regulation. I know that some of that is already included, but I should like clarification, which is why I have proposed this amendment. I do not belittle in any way the work that has been done. I would like the noble Lord, Lord Lipsey, in particular, to know that.
	The League Against Cruel Sports is very concerned and has added its weight. A letter to me states:
	"It is the neglect by the NGRC and the lack of action to address the concerns of 'main-stream' animal welfare organisations, which forms the basis of arguments against their continued self regulation and demonstrates the need for statutory regulation to be included on the face of the Bill".
	I am sure that the Pet Advisory Committee, which has also lobbied me, is known to many noble Lords. It says that,
	"there is no quality assurance of the inspection system and no data is provided to show that it is efficacious".
	It is also concerned about the re-homing of retired greyhounds. It says that the Retired Greyhound Trust, which is largely funded by the industry, re-homes 3,500 dogs each year. I understand that other welfare charities re-home a further 1,500 dogs. Naturally, some owners and trainers retain dogs as pets when their careers are over, but that number is not known because of the lack of data on registration and independent tracks. The trust believes that the figure is unlikely to be in excess of 3,000, although that is speculative and based on poor funding at the level of trainers. Therefore, when taking the figures together, it seems that the fate of some 5,000 to 8,000 greyhounds annually is unknown.
	With that in view, our amendment proposes, under Clause 10, to introduce licensing of all—I repeat, all—greyhound racing tracks through the appropriate national authority within two years of the passing of the Act. I beg to move.

Lord Lipsey: My Lords, I am of course aware of the words of the Companion on Peers who have,
	"an interest that is direct, pecuniary and shared by few others".
	As chairman of the British Greyhound Racing Board, I have such an interest. As I have slept, eaten and breathed greyhound welfare—what a sad fellow I am—since I first raised the subject in the House in 2001, before I held my present position, I will do what I did in Committee: I will give the House my best advice, although I shall not vote on any amendment. I have taken the view of the House authorities, who say that that is appropriate.
	This will not be a party political speech. Indeed, if I were to take a party political position I should fervently hope that this amendment would be carried, so that the 3.5 million people who go greyhound racing each year could be told not to vote for the Tories because they want to do something that will ruin their sport. But I feel quite the opposite, and I hope that they will not. I will not be party political, but I cannot help teasing the noble Baroness, Lady Byford, whom I like and admire, on her decision to table the amendment. She did not mention that the briefing on this comes from the League Against Cruel Sports (LACS) and that all noble Lords have seen it. LACS is the great campaigner for banning hunting with dogs, which noble Lords opposite—I totally agreed with them—were against. Now LACS is tally-ho against greyhound racing, so I am a little surprised that the noble Baroness has chosen to take up its cause, although I am delighted that we have the opportunity to debate it today. Although I have been teasing, I believe not only that this amendment would be bad for greyhound racing, but that it would also be totally ineffective and could spell death—I choose my words carefully—for thousands of greyhounds.
	We would not be debating this issue today if it had not been for Seaham and the Sunday Times. What happened there was disgusting—I and everyone in greyhound racing said so—but a few points should be put into proportion. The Sunday Times produced no evidence whatever for its allegation that 10,000 greyhounds had been destroyed over 15 years at Seaham. Even if there were such evidence, 15 years ago this was normally how a dog at the end of its life was destroyed. Even the RSPCA, we find out from local inquiries, is believed to use the Seaham facility to get rid of surplus dogs. Things have moved on, and it is great that they have, but we should not view the situation today with the benefit of hindsight. What was done was not illegal and, despite the best efforts of the press, no further Seaham has been found.
	This bears directly on the question before us. Those few people involved at Seaham who belonged to official greyhound racing have been fined four-figure sums and banned for life by the NGRC. Those who mock the NGRC as rather feeble might ponder those sentences. Indeed, if I may venture a guess, had a statutory national authority such as the amendment calls for imposed such sentences, they could well have been challenged in the courts as disproportionate—and perhaps successfully so. If your house is burgled, it would not be normal to call instantly for the abolition of the police, especially if the police later successfully identify the culprits and punish them severely, but that is what those who want self-regulation to be ended are effectively doing.
	The LACS brief to all Peers about progress refers to small improvements in welfare in recent years. Having been involved in the process, I cannot agree that they are small. Let me give three examples. The number of dogs re-homed by the Retired Greyhound Trust has doubled in five years. There was talk of a conflict between money and welfare but there is not one in practice because the trust's budget has gone up six times over that period. The NGRC is now enforcing, as it never did before, Rule 18, tracking what happens to dogs on retirement and making sure that euthanasia, which is always carried out by a licensed vet, is a last resort. Track surface improvements that cut track injuries by 50 per cent have been trialled at Poole. I could go on for several hours. There have been great changes.
	In one sense, the Seaham case is an opportunity to accelerate those changes and to get on with it. My organisation, the BGRB, has produced a radical document called Options for Change, which tackles head-on the problem at the essence of this: how to balance better the number of dogs coming into racing with the number that can be re-homed, That is what it mostly comes down to. We have an overall committee, which I chair, with sub-committees—the NGRC, the BGRB and the track promoters—working on the proposals that most affect them. I cannot prejudge the conclusions of these committees but I believe that we will come out with a programme that will impress—perhaps even amaze—our critics.
	I think that the mechanics of who regulates are less important than the substance of the regulations. I thought the noble Baroness was a little confused in the sense that I have no problem with saying that we should have regulations in place by 2008—we are discussing with Defra even now what they should be—but her amendment provides for a state regulator. If we must have the argument about state regulators, let me go through a few bullet points. It will run totally contrary, as Defra has told us, to the Government's policy on better regulation generally. It will create a new state bureaucracy. It will drive greyhound racing back—I warn noble Lords of this from great knowledge—to its former secretive and defensive culture, from which I have been trying to get it to emerge. As greyhound racing will not "own" externally imposed welfare initiatives, it will resist them. In any case, the thought that some government inspectorate will get to the bottom of what is, in essence, a cottage industry beggars belief.
	Even if your Lordships were disposed to favour a new regulatory authority, would it be more sensible to put it on the face of the Bill or to use the powers in the Bill to establish it later? My view is that it would not be sensible to put it in the Bill.
	First, a great deal is going on which has a bearing on the shape of future regulation. There is Defra's greyhound welfare working group, of which I am a member, which includes both greyhound racing and welfarist representatives. There is the extremely important inquiry by the Associate Parliamentary Group for Animal Welfare, chaired by Eric Martlew MP, to whom I pay great tribute for his hard work. The inquiry is due to report early in 2007. There is the sport's own Options for Change programme, to which I have already referred. It would surely be very odd to prejudge that huge body of work driving things forward by determining, as the amendment would, a remedy now.
	Secondly, there is absolutely no agreement between the welfarists on what kind of regulatory authority they are proposing. The LACS amendment—good luck to it—wants a national regulatory authority. However, there is a separate submission from welfare members of the Greyhound Forum which advocates local authority regulation. That, too, is the position of the Pet Advisory Committee, to which the noble Baroness referred. To decide now, on Report in the House, which form of statutory regulation would be right is surely not sensible. It will require proper consideration. The Government have the powers to impose that regulation, should they choose to do so.
	Thirdly—and I speak personally here—let us think of the practical impact of the amendment. I have described the process which the greyhound racing industry has put in hand to tackle the problems. But suppose the House decides today to set up a new national authority. How am I to advise greyhound racing to proceed? To go ahead with our own programme of reform, which will entail considerable difficulty and expense, only for a new regulatory authority to pop up in a couple of years, no doubt to make its mark under a chairman who wants to show that he can sort out what I could not, and with its own programme of change? That could also entail considerable trouble and expense, incurred by people who did not know what they were doing.
	The amendment would not accelerate progress, which is what all of us want; it would stall progress for two years while the great bureaucracy was set up. If this amendment is accepted, impetus for change, which is sweeping through greyhound racing—it is about time, too—will be lost. A more sensible course, in outline, is surely this: the Bill gives Ministers the power to move to impose regulation. In those circumstances, let us allow the inquiries to go ahead and the changes that I am trying to get through to proceed. Then, and only then, in a couple of years' time, we can take stock and decide whether the case for a national authority stands.
	Of course, it is open to Ministers to say at any time, not just 2008, "Sorry, greyhound racing industry, you're messing this up, we are not satisfied, and we are going to put in a regulator". That hangs over us and will no doubt help to concentrate some minds. But to go ahead now and set up a new bureaucracy to do the job that we are trying very hard to do ourselves, without giving self-regulation and the impetus behind it a chance, would do a grave disservice to the welfare lobby and those the noble Baroness wishes to help—the greyhounds. I beg the House not to accept the amendment.

Lord Lucas: My Lords, whatever we do, I hope that the Government will build in to the system a continued incentive for the greyhound industry to improve. My favourite proposal would be to ensure that the vets employed at courses were independent and that they were not selected or paid by—or, at least, could not have their payment withheld by—a body other than the greyhound industry association. You need somebody in the middle of the industry who sees what is going on and pushes continually for change. If that were done in a reasoned way, it would provide the kind of impetus that the greyhound industry could live with.
	There are some substantial changes we might hope for over the next 10 years. Our tracks were designed for much lighter animals; they are being used by big, heavy beasts which tend to do themselves a lot of damage going round tight turns. It takes time to sort that out; you cannot do it at a moment's notice. Our system of racing is designed so that the favourite should not win. In this country, favourites in greyhound racing win about one time in three, whereas in Australia, which uses bigger tracks and different methods, they win most of the time. People in Australia bet on first, second and third together to make it interesting, but in England they bet mostly on the favourite. That, too, has implications, because for the favourite not to win, there has to be a lot of contact and obstruction between the dogs. That will often lead to crashes and injuries. Things need to be done over time because it would be incredibly expensive and inconvenient, and very disruptive to the sport, to try to do them immediately. None the less, continual improvement is needed so that the sport is in the end run properly and in the interests of the animals, with injuries minimised and enjoyment maximised, rather than the present, rather unsatisfactory situation.

Lord Kirkhill: My Lords, I support the amendment tabled by the noble Baroness, Lady Byford. She is right to raise the issue today. She is correct also in suggesting that this clause should be in the Bill. Despite what the noble Lord, Lord Lipsey, said, it is clear that self-regulation is not working. From what I hear in the street and among groups with which I associate, it is felt that an audited, national regulatory authority is necessary.

Baroness Fookes: My Lords, I am minded to support my noble friend Lady Byford, because, despite the points eloquently made by the noble Lord, Lord Lipsey, I would have been more impressed had the improvements been made several years ago and not now. It seems that they are being made as a result of the impetus towards change that is provided by the Animal Welfare Bill and pressure from a number of sources. If this is not the right move, I expect the Minister to make today a workable suggestion in lieu of my noble friend's amendment.
	Although an official body looks at regulated tracks, I am not clear—perhaps I will be enlightened—whether any of the changes and improvements to be made through the regulatory body and self-regulation will extend to unregulated tracks, of which I understand there are very many. I remain extremely concerned about that. Unless the Minister comes up with a proposal here and now which satisfies me that this matter can be dealt with, I intend to support my noble friend Lady Byford.

Lord Hoyle: My Lords, I congratulate the Minister on the measures he has taken since his appointment and on the progress made. However, I am concerned about unregulated tracks. Would they fall into line with what is being proposed by the regulated tracks, particularly on the attendance of veterinary surgeons? We know that this is the difficult side of the sport. One wants to see the sport continue. We want to see increased safety for the animals, and we certainly want to see a lot more of them rehoused. However, I am extremely concerned about tracks that will go their own way—I do not think that the Minister will be able to speak about them today. I serve on the committee chaired by Eric Martlew, and we will bring forward our proposals, but we should do all we can to protect the welfare of the animals. As far as I can see, this amendment can only strengthen the industry. I hope that the Minister will tell us what effect the changes will have on unregulated tracks, which are of great concern to us all.

The Earl of Onslow: My Lords, I believe that a very large percentage of greyhounds are bred in Ireland—and I am sure that the noble Lord, Lord Lipsey, will nod and say whether that is right. How would our regulation overlap in that sense? It is obviously a problem, when one is being asked to judge whether we should do this by self-regulation and ensure that the self-regulation is properly done or by government regulation. I am always inclined to go for self-regulation, but I am open to persuasion either way.

Lord Kimball: My Lords, I am particularly interested in subsection (2)(c) of my noble friend's amendment, on the,
	"identification of greyhounds employed for racing purposes".
	One reason why I was eased out from running the Greyhound Racing Fund was that I wanted to be absolutely certain that the dogs could be properly identified. At the moment, dogs are identified only by an earmarking scheme. I see from the fund's annual report that the amount of money spent on the earmarking scheme over the past 10 years has hardly varied. It is not a very satisfactory situation putting a mark in a dog's ear. It is very easy to adjust it at certain times. The proper way to do it would have been to chip all the greyhounds. When a greyhound goes to race it is weighed immediately as it has to come within a certain weight limit, so it would be perfectly possible to put something that could read its chip above the place where it is weighed. That could be done at the same time. It is very interesting that all dogs from Battersea Dogs & Cats Home are chipped, and I do not believe that those chips can have done anything but good, as they enable dogs to be properly identified. We must make a move in that direction.
	I turn to the other interesting thing about the amendment. If you look at the things on which the Greyhound Racing Board spends money, you can see that it is doing absolutely everything that the amendment asks for, including drug testing. Every dog is tested for drugs before it goes on to the track, so that is already there. All the veterinary surgeons are independent and attend the meetings. The licensing of kennels is very difficult to enforce, but the other real problem is the maintenance of tracks. In Ireland, there was a big programme to get all the tracks up to a certain standard. In this country, the existing 30 tracks have a very restricted standard. Then there are the 17 flapping tracks. What are we going to do about the tracks in Wisbech and other places that do not come under the National Greyhound Racing Club?
	So although the amendment may be desirable, a great deal of the work is already being done, and I would rather see it being done by the greyhound people rather than have something inflicted on them by the Government.

Lord Lipsey: My Lords, I should like to set the noble Lord's mind at rest on the matter of independent tracks. They will be covered by regulation under the Bill. My own strong belief is that within two or three years, the remaining dying tracks will either have gone or one or two of them will have joined the NGRC.

Lord Bilston: My Lords, I should like to make a couple of comments on a very important issue. I congratulate the noble Baroness, Lady Byford, on raising the issue. The welfare issues for greyhounds are of great concern to people involved in greyhound racing. I can declare that I have owned greyhounds for more than 40 years and am a former chairman of the All-Party Parliamentary Greyhound Group. I have had great involvement with greyhounds over many years. I pay special tribute to my noble friend Lord Lipsey for the stewardship and leadership he has provided over the past three years in his capacity as chairman of the British Greyhound Racing Board. He has done an excellent job.
	In essence what we are doing today is taking stock. I say on behalf of the greyhound group that we constantly monitor, observe and comment on issues affecting our national greyhound sport. I assure your Lordships that all the members of that group are happy and satisfied. We recognise that there are many issues, which have been raised today, that still need to be addressed—but they are being addressed. Progress is being made in every aspect, as was evidenced by the noble Lord who spoke just before me about what is being achieved.
	At this stage, I urge the House to recognise and value what progress has been made. Outside the isolated incident that took place in County Durham, which we all abhor and find totally disgusting, good progress is being made on the welfare of greyhounds. There is greater care by the owners of greyhounds, and the Retired Greyhound Trust is rehoming many more greyhounds. I assure your Lordships that in every registered greyhound stadium there is a greater awareness of, and interest in, the welfare of greyhounds and their rehoming after they have retired than I have ever known in the time I have been involved in greyhound racing. As your Lordships know, the sport gives a great deal of pleasure to many thousands of people, but at the base of it we need to make sure, as noble Lords have said today, that our greyhounds are happy and well treated and that, at the end of their racing life, they have a proper retirement and a proper home.
	I hope that we will allow my noble friend Lord Lipsey and his board, along with the National Greyhound Racing Club, to continue to do the work they are doing. If, as has been said, the Minister here or Ministers in the other place feel that there is a need for certain tightening up, I hope they will bring forward that kind of measure at the appropriate time. All I want to do today is assure your Lordships that things are not in any way as bad as they have been portrayed in that dreadful case recently, and that we have good reason to be thankful that progress is being made. I hope that your Lordships will all, at some stage in the next few months, go and take part in a lovely night out in greyhound racing, and see how well the animals are looked after. If I am there and I can find you a winner, I will do my very best to oblige.

Viscount Falkland: My Lords, we have heard of the good will of the noble Lord and all those involved with greyhound racing, along with their aspirations for the welfare of greyhounds, but neither he nor the noble Lord, Lord Lipsey, have said anything to us about the scale of what we are looking at.
	The article in the Sunday Times drew to our attention the scale of redundant superfluous greyhounds. Unlike racehorses, dogs have litters, which adds to the problem. It seems to me that the public are alerted to the fact that large numbers of dogs are bred uniquely for racing and that those that do not reach the appropriate standard will become redundant. The intention is to rehome them. Some people take them and they often make good pets, but the sheer number of dogs is huge. That has not yet been mentioned. There is no way in which any body, no matter how well disposed, will farm out the number of dogs which are no longer valuable as racing animals. A balance needs to be drawn here, as in everything. These dogs are bred to race. People gamble on those races. The same applies to horse racing. We have to accept that animals which no longer race and cannot be found homes will be destroyed. That is unacceptable to many people. We have to find a balance. I do not take a moral view on the issue. Nobody is suggesting that we should consider banning dog racing because of the horror of all these animals having to be destroyed because they are no longer of any use—far from it.
	What we have to decide today is whether the way of dealing with the matter suggested by the noble Lord, Lord Lipsey, or that of the noble Baroness is right. I tend to go towards that suggested by the noble Lord, Lord Lipsey, because I believe that it would be less bureaucratic, but can his method deal with unlicensed tracks, as many noble Lords have said? Like other noble Lords, I look forward to hearing what the Minister has to say on this. What he says will determine the way in which I shall vote, if there should be a vote.

Baroness Miller of Chilthorne Domer: My Lords, the noble Baroness, Lady Byford, said that she tabled her amendment as a reaction to the article in the Sunday Times. I am sure that the House is grateful to her for doing that and enabling this debate to take place, which has brought out serious welfare issues and has enabled us to hear from people who know a lot about the industry. I was interested to hear my noble friend Lord Falkland refer to certain parallels that the debate brought out for him.
	I appreciate the ironic smile of the noble Lord, Lord Lipsey, with regard to the issues mentioned in this debate and our debates on hunting. As regards wastage of dogs, what happens to hounds when they have finished drag hunting? Your Lordships debated at length what happened at the end of hounds' working lives. No doubt the same issues that we have debated apply in that case. My noble friend said that horseracing does not have to deal with certain issues because race horses do not breed to the same extent as dogs. We have to decide whether we should include this new clause in the Bill or whether we regard the Bill as being adequate to address greyhound racing and other animal issues.
	I understand the frustration that it may take slightly longer to go down the route proposed by the noble Lord, Lord Lipsey, but I am sure that the noble Baroness is not promoting regulation in the Bill for every industry involving animals and entertainment. We are trying to draw up a broad framework. Therefore, I hope that the Minister will draw up a broad framework which encompasses not only greyhound racing but all those other sports that involve animals on which betting takes place.

Lord Christopher: My Lords, I congratulate the noble Baroness, Lady Byford, on tabling the amendment, and I apologise to her, because it was my intention to add my name to it and I completely overlooked doing so. I find myself very much in the same situation as the noble Baroness, Lady Fookes. I would be more impressed with self-regulation if we had seen it working; whereas demonstrably it has not been working. My noble friend refers to an isolated incident, but rather like the pheasants that the noble Earl referred to, we simply do not know whether it was an isolated incident. Indeed, there was a further report, about which I have read nothing since, of a not dissimilar case somewhere up in the north-west. There may well be others, and the untraceable gap between the numbers of greyhounds that are used for racing and what happens at the end of the day is not capable of explanation. If I share anything with the noble Baroness, Lady Byford, on this, it is simply that we should have some data on what is happening.
	I looked back quite a long time, but I cannot recall any occasion when any profession, industry or trade has been facing the possibility of statutory regulation as against self-regulation when it has not protested as volubly as it possibly could. My noble friend Lord Lipsey certainly did that this afternoon. But it seems to me that what will have to be done in this area at the end of the day will be so costly that there is no real chance of the greyhound industry finding the money to do it. There will be slippage, and there will be poor quality. Something of the sort will happen. I accept what my noble friend said about this boiling down to the point that the noble Viscount on the Liberal Benches made about supply and demand in terms of the number of greyhounds required for racing. That may well be insoluble as far as it goes, but if that is what people do we should be saying to them that they must face up to the economic consequences.
	It is not acceptable to British public opinion that thousands of dogs annually are simply put down. If the Sunday Times article achieved anything at all, apart perhaps from alerting us, it is that public opinion will now expect this House and the one down the road to say clearly that something is going to happen about this. The public will not understand all the complexities of secondary legislation or anything else. That is not what they will understand. They will want to see that we are doing something positive. This amendment does that. I hope that whatever the noble Baroness decides to do this afternoon she will not let this go at the final stage.

Lord Rooker: My Lords, we have had a fascinating debate with 12 speakers. This is another issue—and I do not say this lightly—on which progress has been made. There was no commitment originally in the Bill, but there is a commitment now, which I shall come to in some detail.
	The noble Baroness, Lady Byford, asked me five specific questions about how the system would work on random inspections, drug testing, audit of enforcement, openness and transparency and quality assurance and inspection. The answer to all five is "Yes". Obviously, we have to look at the relationship between regulations and codes, so that we can address the issues through whatever the best route is. But whatever route is chosen, the answer to those five points is "Yes". The industry has to get its act in order; like a lot of others, by the way. I do not know the full history of all this. The Sunday Times piece was important, but in terms of the time span and what has happened in the past, as the noble Lord, Lord Christopher, said, clearly something does not add up with the numbers. There is no doubt about that. Therefore, it is the last chance for the industry to get its act together. Self-regulation is a preferable route in many areas, because it is quicker than the statutory route, but in this case, this is the last chance and the Bill gives us the facility to take action. The public are rightly concerned about this issue in light of the press stories in the summer.
	The regulated sector is making advances in welfare. My noble friend Lord Lipsey has highlighted the action taken by the National Greyhound Racing Club against trainers known to have used the yard at Seaham to dispose of unwanted greyhounds. I reiterate that there is little reliable, statistical evidence of systematic mistreatment of greyhounds on retirement. It is true that the figures do not add up in terms of the numbers retiring and what allegedly happens to them, but we do not have facts that would be reliable evidence. However, the industry should be doing a lot more to ensure that comprehensive records are maintained. The industry must be accountable for what happens to these dogs and there must be a better system for identifying dogs. The lack of comprehensive accurate records kept by the industry is bound to make people suspicious and not trust it—and rightly so. It is the industry's problem and the onus is on it.
	We are still keen for self-regulation, but only if all concerned can be satisfied that open and auditable self-regulation is possible. This the last chance; there must be self-regulation under the circumstances I have described, otherwise a statutory route will be taken. More needs to be done and I understand that the NGRC is having discussions with the United Kingdom Accreditation Service concerning the way its activities should be evaluated.
	I plead guilty to not having been greyhound racing since I was probably too young to go—maybe eight or nine years old, when I was taken by my father, who was selling newspapers from a stall at Perry Barr greyhound stadium. I am sure that I went under a barrier. However, we at Defra believe that the NGRC has an image problem. I do not know why it is called a club; that gives the wrong impression. It suggests a closed shop, a private members' club where no one is admitted unless they are a member. That does not give a good impression. It suggests some kind of exclusive closed shop and is not the sort of image that we or Parliament would want from a body responsible for winning the hearts and minds of those who do not consider the NGRC to be a suitable welfare regulator. We start from the premise that it has not been suitable and we want to give it a chance to become suitable. The public does not trust it and the body has one last chance—it has been seen to be making a move and that is important.
	It is also evident that the British Greyhound Racing Board needs to look carefully at marshalling its resources to boost the funding it has already allocated to deal with welfare matters. We are fully aware that many welfare groups are very sceptical that the NGRC can ever be a fully effective regulator. I have been on the receiving end, as have noble colleagues, of representations from the third sector—welfare groups.
	Defra's greyhound welfare working group has achieved much in opening up a dialogue between the racing industry and welfare organisations. We must acknowledge that much remains to be sorted out. The industry and welfare organisations were able to work successfully together in drawing up a greyhound charter and, with give and take on both sides, there is no reason why we cannot produce regulations and a code of practice that is broadly acceptable; but it must fill proper criteria.
	The Associate Parliamentary Group for Animal Welfare has also set up an inquiry into the welfare implications of greyhound racing. We welcome that initiative. The inquiry will report in April next year and we shall consider its recommendations and how they fit in with what we believe can be achieved.
	The amendment seeks to force the Government into introducing a licensing scheme within two years of the Bill receiving Royal Assent. However, it would have the effect of ensuring that any provision on greyhounds that had not been made within two years of Royal Assent could not be made at all. I am not praying in aid a technical defect, because we could put that right at Third Reading. If we are going to legislate, however, we have to do it with precision and not look as though we did not understand the full consequences of the legislation. The amendment would force the Government into an unprecedented situation of being required to produce regulations by a certain deadline, without any obvious sanction if we failed to do so. That would be a problem, as we could lose our power to regulate greyhounds—that would be the consequence of the amendment as it is. I am not resting my case on that; I am just pointing it out in case there is a desire to come back on the issue at Third Reading, as noble colleagues are fully entitled to do.
	Concerns over the timetable for introducing regulations on greyhounds have been expressed by many Members. If the noble Baroness will withdraw her amendment—notwithstanding the fact that she could come back with something—I will commit on behalf of the Government and Ben Bradshaw, the Minister with day-to-day responsibility for these matters, to bringing forward regulations and a code to ensure standards at greyhound racing, to be introduced by the end of 2008 and to come into force by April 2009.
	I repeat this, because it has to be the case. We cannot do everything at once. The resources are not there in the department. We have had to set priorities on how we bring the various parts of the legislation into force. Indeed, in some areas, we have not yet made commitments or have said that we will introduce codes and regulations as soon as possible. In other areas, we have been able to make commitments and bring them forward earlier than we originally promised. This is an area that was not on the radar, but, as I said, we will get something into force by April 2009 and provide a commitment that any proposals will involve regulation backed up by a code of practice.
	This is the last chance. If the industry wants statutory regulation—so that, in effect, it is taken out of the hands of the people who are doing it now—it should do nothing, in which case it will succeed. I wish the industry well—and I wish my noble friend well—but it has some serious image problems, which we must make abundantly clear to it. Parliament requires action. If the action is not there, Parliament will take the action.

Baroness Byford: My Lords, I am grateful to the Minister for his response, which I thought was very measured. I totally agree that the industry has the wrong impression and that there is a lot to be done. I felt that this would be a worthwhile debate at this stage; indeed, I think that, whether people have agreed or disagreed with me, important points have been made. Before I decide what I will do, let me just thank everyone who has contributed.
	I am well aware of the Defra group and the all-party group that is looking into the whole question of the future welfare of greyhounds. Again, I think that, whether people agree with me or not, we all want better welfare—that is what the debate is all about. The question is how we do it. I make those general points now and will come back to the Minister's response.
	I could say that the reference of the noble Lord, Lord Lipsey, to hunting was a little below the belt, but I am quite used to having a belt that moves up and down. My amendment does not propose a ban in any way or form on greyhound racing. In fact, I hope that, even if the amendment has to be redone, it would give greater strength to the industry and make it go forward, so I thought it a little surprising, and a little unlike him, that the noble Lord decided to take that route.
	It was not me who raised this issue—my amendment followed on from the Sunday Times article—but the noble Lord, Lord Lipsey, will know very well that I wound up in a debate on greyhound welfare three or four years ago, so he cannot say that I am a latecomer to this business. I have been taking a very great interest in it for some time.
	I accept that the industry has made some improvements. I said that earlier and I complimented the noble Lord on what it had done, but it is too little and too late. I should have liked the industry to have moved further forward. However, that is for another day.
	I shall not repeat the comments of my noble friends Lord Lucas, Lady Fookes and Lord Onslow or the noble Lord, Lord Kirkhill, because I think that they were basically in favour of what I am trying to do in achieving better welfare. Therefore, I excuse myself from picking up on their comments. The noble Lord, Lord Hoyle, raised the question of unregulated tracks—a point that I brought up in Committee. This is an enormous problem. Although the regulated industry says that it can cope, I am not convinced that it can; nor has it told us what action it will take. If the owners of unregulated tracks wish to continue to run greyhound racing in their own way, there is nothing at present to bring them back into the fold. So I am still very concerned about that.
	My noble friend Lord Kimball may be slightly more in favour of the status quo. His background knowledge is much greater than mine and I can understand his view, but I hope he will accept that I have grave concerns that the industry may not have moved far enough. However, he raised the very important question of identification—a matter that we have mentioned during different debates on farming and agriculture. I refer, in particular, to identification tags on the ears of sheep and cattle, which get ripped out, and microchipping might be one way of overcoming that problem.
	I think that the noble Lord, Lord Bilston, whom I also thank for his contribution, is slightly happier and more satisfied than I am with the current standing of the regulatory board. He acknowledged that there are many issues to be addressed. At this stage, there are sufficient to make me unsure that the board will achieve what I know some of its members wish to do. It is not that they do not know what they wish to do.
	I am grateful to the noble Lord, Lord Christopher. If I table another amendment on this issue, perhaps he will add his name to it. He raised the very important issue of the problems caused by lack of data, which it would be an enormous help to have. I hope that I have not missed out people who have spoken. If I have, I apologise, as I greatly valued all contributions.
	I return to what the Minister said and the offer that he made. He said, as I and others have done, that at present the industry should be doing more. We all agree with that. The question is: how do we go about it? What do we do with the industry members that are not regulated? I am well aware of the work that is being done by the other groups and I do not wish to take issue with that. I am also aware that the Minister has been persuaded to give the welfare of greyhounds a higher priority. We have met him and his officials outside the Chamber and I accept what he said about the difficulties that have to be faced: there will be much work to be done on the Bill; a lot of codes of practice and regulations will be required; and there are timetabling pressures in that regard, let alone financial pressures. I am grateful to him and his colleagues for recognising that the welfare concerns relating to the greyhound industry should have been brought higher up the pecking order. That is an enormous help.
	I ask myself where that leaves me. I am grateful for, and encouraged by, the comments that have been made by noble Lords on all sides. I should like to look at Hansard very carefully when it is printed tomorrow to see whether there are issues that the Minister and I will have a chance to talk about to see whether we can do something before Third Reading, which is due to take place a week on Wednesday. I do not wish to be disruptive but it is an issue that has taken a long time to be addressed, and it has still not been fully and properly addressed. This is the time to say that the issue should be taken into consideration, before the Bill do pass.

Lord Williams of Elvel: My Lords, before the noble Baroness sits down, I am sure that she is aware of the new guidance in the Companion that issues of principle should be decided on Report and not carried through to Third Reading.

Baroness Byford: My Lords, I understand that, but the Minister has made us an offer, if I can describe it as that—it seems a dreadfully rude expression to use in your Lordships' House. Perhaps negotiations could carry on, which is why I referred to it.

Lord Williams of Elvel: My Lords, let me be clear that the noble Baroness accepts that it will be a matter for the Minister to come back to at Third Reading with a commitment from the Government. That is in order.

Baroness Byford: My Lords, slightly tongue in cheek I accept what the noble Lord says; he has been in this House a lot longer than me. However, I think that negotiations will take place following this. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 11 [Transfer of animals by way of sale or prize to persons under 16]:
	[Amendments Nos. 11 and 12 not moved.]

Baroness Miller of Chilthorne Domer: moved Amendment No. 13:
	After Clause 11, insert the following new clause-
	"PET FAIRS
	(1) A person commits an offence if he-
	(a) sells an animal in the course of or in connection with a pet fair, (b) arranges a pet fair, or (c) knowingly participates in making, or carrying out, arrangements for a pet fair.
	(2) In this section, "pet fair" means an event-
	(a) which is open to the public (whether on payment or otherwise), (b) at which animals are sold (or which is held with a view to the sale of animals) as pets, and (c) where any such sale is made (or is to be made) in the course of a business.
	(3) In subsection (2)(c), "in the course of a business" does not include a non-commercial exchange of animals.
	(4) In this section, "pet fair" does not mean an event held in the ordinary course of a business that consists wholly or mainly for the keeping or selling of animals at premises ordinarily occupied for the purposes of that business.
	(5) For the purposes of this section-
	(a) "selling" an animal includes- (i) offering or exposing it for sale, (ii) exchanging it, or offering or exposing it for exchange, (iii) transferring, or agreeing to transfer, ownership of it in consideration of entry by the transferee into another transaction; (b) the sale of an animal "as a pet" includes its sale for private captivity or private husbandry, but does not include its sale for any purpose relating to agriculture.""

Baroness Miller of Chilthorne Domer: My Lords, we move on to pet fairs. I tabled the amendment partly to say that, following the Defra announcement, I commend the Minister on the decision to ban the commercial sale of animals at pet fairs. This is an important step that will contribute greatly to animal welfare.
	I also tabled the amendment to be able to ask the Minister a few details about the implementation of the promised regulations. First, is it the Government's plan to institute the ban according to the timetable that he shared with us for secondary legislation? In other words, can we count on it being enforced by 2008? Secondly, will the Minister still produce by that date regulations and codes of practice for pet fairs without commercial sales or for fairs that involve poultry, carp and pigeons?
	Finally, will the Minister say a little more about the definition that his department will put on the word "commercial"? It will certainly be a matter for consultation. I appreciate that because it is important to get the balance right in prohibiting events where conditions are bad and sales are for profit—the sort of fairs that the Government have it in mind to ban. But what about the genuine hobbyist events that are community events and that we on these Benches and the Government are very anxious to see continue? They should not be brought into the commercial sector in any way. In discussions which I have had with animal hobbyists it has been suggested that "non-commercial" can include, for example, the exchange of excess breeding stock, which ensures that the genetic pool continues to be wide, and the exchange of best practice. Those are genuine non-commercial activities. Questions arise whether they will be members-only events and how to ensure that the exchanges are between those who are genuinely concerned primarily for the animals and their hobby and not about profit.
	Once again I congratulate the Government on bringing forward such a definite step on pet fairs. I look forward to the Minister's answer, and beg to move.

The Duke of Montrose: My Lords, we are glad to see that the noble Baroness has tabled this amendment. It is a beefed-out version of the amendment we tabled in Committee. Again, as the noble Baroness has pointed out, things have changed. The Government announced on 10 October that they have proposals for new measures; I am a little surprised that they have not given us an amendment of their own. Perhaps the Minister can explain why it has not been appropriate for the Government to table an amendment at this time.
	The Government's proposals are in a similar vein to some of the questions of the noble Baroness, Lady Miller. It would be helpful to the House if they could clarify what was meant by the description of,
	"pet fairs that do not involve the sale of animals, or that do involve the sale of animals but not in the course of a business".
	We shall listen to the Minister's response. At present, however, I would support the noble Baroness.

Lord Rooker: My Lords, I can give the commitments the noble Baroness asked for regarding the dates without reservation—if I am wrong, I will no doubt be told while I am on my feet. Our commitment is certainly by 2008, which is what she asked for. It has changed. There has been sustained parliamentary pressure on this issue. As I shall mention, there has been an intervention from the courts and we must take account of that.
	As has just been mentioned, on 10 October we made an announcement in the other place on our proposals on the regulation of pet fairs. As with all secondary legislation under the Bill, the proposals are still being formulated and must be fully consulted upon in due course. We now propose to prohibit the sale of animals to members of the public where this is part of a business at pet fairs. However, we also propose to make exceptions to this prohibition in the case of koi carp shows, racing pigeon sales and poultry sales. We propose that these types of events could be licensed by local authorities under regulations to be made under the Animal Welfare Bill.
	We propose to clarify in secondary legislation that those events where there is either no selling of pet animals to members of the public, or where there is selling of pet animals but not in the course of a business—such as hobbyists selling excess stock—can continue to take place without a requirement to be licensed. All events where there are animals present will be subject to the welfare offence whether or not they are specifically regulated by the local authority.
	The Government revised their original proposal to regulate the commercial selling of animals at pet fairs following a judgment made in the High Court on 14 June. The judgment was in relation to a judicial review in the case of Haynes v Stafford Borough Council about the issuing of a licence under the Pet Animals Act 1951 to the organisers of a pet fair. One of the findings of the judicial review was that local authorities could not issue licences under the 1951 Act to organisers of pet fairs where these events fell within the activity described in Section 2 of the 1951 Act and involved the sale of animals, as part of a business, to members of the public.
	The best place to deal with the regulations and prohibitions on the selling of pet animals is in secondary legislation. The alternative—placing such restrictions in the Bill—would be likely to lead to the sort of difficulties experienced under the Pet Animals Act 1951 that resulted, with its associated amendments, in the judicial review.
	This amendment contains a definition of a pet fair, and we would welcome the opportunity to look at this more closely when drafting the regulations. If the other question of whether there is a definition of commercialism needs to be looked at, the place to do so is in regulations. There will be plenty of opportunity for this and, of course, full consultation on the relevant amendments. I hope that will satisfy the noble Baroness.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply, which satisfies me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 12 [Regulations to promote welfare]:

Baroness Byford: moved Amendment No. 14:
	Page 8, line 29, at end insert-
	"( ) Regulations promoting the welfare of animals under subsection (1) may only be made if the appropriate national authority is satisfied, on the basis of scientific evidence in the public domain, that those regulations are necessary to promote welfare."

Baroness Byford: My Lords, I now turn to a group of amendments that includes a number of government amendments, but is headed by our Amendment No. 14 which requires that regulations promoting the welfare of animals under subsection (1) may be made only if the appropriate national authority is satisfied on the basis of scientific evidence in the public domain that those regulations are necessary to promote welfare.
	During the passage of the Bill, we have had long discussions about what may be in the codes. On some issues, we feel very strongly that the codes should be based on scientific evidence. This cluster of amendments addresses the current strategy for making regulations and codes of practice. Amendment No. 14 ensures that regulations promoting animal welfare are based on scientific evidence. The amendment includes a provision, similar to that in Clause 1(4), that regulations and changes to regulations should be made only when the appropriate national authority,
	"is satisfied, on the basis of scientific evidence",
	that they can be justified.
	I strongly believe that all consultations under the Bill and the evidence on which the appropriate national authority relies should be open and transparent. It is not enough for a national authority simply to state that it is satisfied that the evidence supports its actions without making that evidence available. Although Ministers give assurances that they or this Government will not abuse the powers given under this legislation, it has to stand the test of time. If it is 95 years before we have new legislation, we must be sure that this version is robust. So far, the Government have resisted amendments to rectify these defects without providing a suitable explanation for why they oppose them. The parameters for regulations in the Bill are important because it is an enabling Bill. We describe it as a skeleton Bill because most of the work is done in regulations and codes.
	That brings me to Amendments Nos. 19, 20, 21, 49 and 50. They ensure that codes of practice are subject to the affirmative resolution procedure in both Houses. I know that the Minister is always careful to make sure that codes are relevant, but, with his many years of experience in the other place, he knows that we can talk on them, but cannot alter them. That is why we are encouraging the Government to accept using the affirmative resolution procedure. I thank the Clerks who advised me on this matter and said that while famous codes of practice, such as admissions codes for education, are subject to the negative resolution procedure, there is nothing to prevent the affirmative resolution procedure applying to new codes of practice. When he responds, I hope the Minister will clarify that for me.
	This is an extremely important point, and I was disappointed to see from the timetable the priority that the codes have. Since then, I have been grateful to the Minister for acknowledging that they should have been higher up the list, particularly the code on greyhounds. Some 22 sets of regulations are set to arrive in the next four years, and I hope this debate will stimulate some of the decisions about when they will be enacted.
	I return to Amendment No. 14, on which I have support from the Countryside Alliance and the National Farmers' Union. In the latter's submission to me, it states that regulations should be made only if Ministers are satisfied that there is scientific evidence. The submission states:
	"Indeed, in his letter of May 15 to the Delegated Powers and Regulatory Reform Committee, Lord Rooker refers to these order-making powers as a fundamental element in the legislation to enable the law to be developed 'to reflect changing animal welfare practices and emerging scientific evidence' Without such a safeguard what is to prevent the introduction of regulations which are very demanding or restrictive on the owners of animals promoted by an emotional campaign ... for which there is scant scientific or veterinary justification?"
	That is an important point for us to consider.
	I look forward to hearing the Minister's comments on his amendments and I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I should just like to comment that more and more provision is being made through secondary legislation. That is not really a debating point for the Bill, but as we will inevitably debate Lords reform in future—the powers and so on—the fact that we cannot amend secondary legislation is something that we will want to come back to, so that Bills such as this can pass with our confidence that we will receive a far more satisfactory response when regulations arrive on the Floor of the House.

Lord Rooker: My Lords, there is a strong case for considering the point just made by the noble Baroness, Lady Miller, that we should be a proper revising Chamber, rather than what I think we are—more of a repetition Chamber presented with a fait accompli: we either vote down an order or accept it; and I do not remember the last time that the House voted down an order. There is a strong case for considering the powers of what would be a revising Chamber, but that is a matter for another day. I am sure that powers and competencies of a second Chamber will be widely debated in future.
	On Amendment No. 14, which was tabled in Grand Committee as part of a large group, we do not think it necessary to legislate in that way for something that we think should take place in practice anyway. The Secretary of State and the National Assembly for Wales would always take existing scientific evidence into account when framing regulations, in line with best practice in policy-making. In addition, the Government intend to make regulations only to the extent to which they are necessary to promote the welfare of animals for which a person is responsible.
	Emphasising the use of scientific evidence risks excluding some other important factors that should be taken into account when considering whether to legislate, such as social and economic consequences. One must consider the matter in the round. In answer to the latter point made by the noble Baroness, Lady Byford, we are committed to evidence-based policy-making. Where there is overwhelming public concern about a particular issue, the evidential base may take account of the views of the public as well as any available scientific studies. The two examples of which I am reminded are the banning of veal crates and sow stalls, where you could argue that the science was in favour of a change but the overwhelming public concern, the economic and social aspects, gave weight to the need to regulate, as we did. That must not be ruled out. In other words, looking at the science is not the be-all and end-all; there are other factors to be taken into account.
	Amendments Nos. 15 to 18, 22 to 25 and 51 all reflect commitments that I gave in Grand Committee and to the Delegated Powers and Regulatory Reform Committee. I trust they are well received. I believe I can be fairly brief. Amendments Nos. 15 and 25 introduce a duty to consult before introducing licensing and registration requirements under Clause 13, and before revoking a code of practice under Clause 17. Amendments Nos. 16 to 18 and 22 to 24 relate simply to drafting, so I shall not go into them in detail.
	Amendment No. 51 reflects an undertaking that we gave to the Delegated Powers and Regulatory Reform Committee that there should be a parliamentary procedure for revoking and not replacing a code of practice, which would reduce the welfare protection available to those previously covered by the code. We do not think that that will happen often, if ever, but because it would be an exceptional occurrence, we certainly agree that parliamentary scrutiny of the decision would be appropriate.
	Amendments Nos. 19 to 21 would require codes of practice made under the Bill to be exercisable by statutory instrument and thereby approved by the affirmative procedure. Clause 59 makes it clear that the powers in the Bill to make orders or regulations are exercised by statutory instrument, which has the effect of applying the provisions of the Statutory Instruments Act 1946. Subsection (2) further requires that any regulations to extend the definition of an animal, to exempt mutilations, to promote welfare or to introduce licensing or registration schemes would have to be approved by the affirmative procedure described in the subsection. I should point out, however, that codes of practice are not legislation and cannot therefore be statutory instruments according to the meaning that the Statutory Instruments Act 1946 gives to them.
	The Delegated Powers and Regulatory Reform Committee also considered the negative procedure sufficient for its report on the Bill. In the past five years, the House has always accepted the recommendations of the Delegated Powers and Regulatory Reform Committee. There was one exception—I do not remember what it was and I do not recall whether I was at the Home Office or the ODPM at the time—where the House decided to go further. It was very unusual, however. By and large, the House accepts the committee's recommendations. I therefore hope that the government amendments are accepted, and that my answer to Amendment No. 14 in particular is acceptable.

Baroness Byford: My Lords, I am grateful to the Minister for explaining his amendments. We are very pleased to support them, and to support Amendments Nos. 15 and 25 in particular, which put a duty on the national authority to consult. The Minister asked when any regulation had been rejected. I believe that the House voted against one on supplementary medicine. It went to another place and our vote was overturned straight away. I accept what the Minister said about any future discussions on the powers of this House, but it would make an enormous difference if we could have a greater say in this.
	The Minister says that any judgment would be based on scientific evidence. I am happy to have that on the record. I do not doubt it for a minute. My amendment was not trying to suggest that it should be considered only for that reason. That was not its intention. This shows how carefully one must choose the right words to ensure that one's amendments fit what one is trying to do. I thank the Minister for his response, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 13 [Licensing or registration of activities involving animals]:

Lord Rooker: moved Amendment No. 15:
	Page 10, line 1, at end insert-
	"( ) Before making regulations under this section, the appropriate national authority shall consult such persons appearing to the authority to represent any interests concerned as the authority considers appropriate."
	On Question, amendment agreed to.
	Clause 15 [Making and approval of codes of practice: England]:

Lord Rooker: moved Amendments Nos. 16 to 18:
	Page 10, line 25, leave out "such persons"
	Page 10, line 25, after "draft" insert "such persons appearing to him to represent any interests concerned"
	Page 10, line 25, leave out "thinks fit" and insert "considers appropriate"
	On Question, amendments agreed to.
	[Amendments Nos. 19 to 21 not moved.]
	Clause 16 [Making of codes of practice: Wales]:

Lord Rooker: moved Amendments Nos. 22 to 24:
	Page 11, line 14, leave out "such persons"
	Page 11, line 14, after "draft" insert "such persons appearing to it to represent any interests concerned"
	Page 11, line 14, leave out "thinks fit" and insert "considers appropriate"
	On Question, amendments agreed to.
	Clause 17 [Revocation of codes of practice]:

Lord Rooker: moved Amendment No. 25:
	Page 11, line 24, at end insert-
	"(3) Before making an order under subsection (1), the appropriate national authority shall consult such persons appearing to the authority to represent any interests concerned as the authority considers appropriate.
	(4) Subsection (3) does not apply in relation to an order revoking a code of practice in connection with its replacement by a new one."
	On Question, amendment agreed to.
	Clause 18 [Powers in relation to animals in distress]:

Lord Rooker: moved Amendment No. 26:
	Page 12, line 37, at end insert-
	"( ) A person affected by a decision under subsection (13) may appeal against the decision to the Crown Court."

Lord Rooker: My Lords, this group contains exclusively government amendments which respond to concerns expressed in both Houses about the absence of effective safeguards on the exercise of some powers in the Bill. I informed the Grand Committee that we had taken on board some of the concerns already expressed in another place on this point and were still considering how best to respond to them. I trust that noble Lords will agree that this group of amendments achieves the correct balance.
	Amendment No. 30 isparticularly important. This new clause will ensure that an owner has a right of appeal where a court makes an order under Clause 20(1) or refuses to do so at the owner's application. As noble Lords will be aware, legitimate concerns have been expressed about the possible exercise of Clause 20 powers in the absence of a prosecution. While I think we are all agreed that it is important to be able to dispose of animals even though a prosecution may not have been brought, we have sympathy with the concern that there should be sufficient safeguards of the rights of owners when this power is exercised. Amendment No. 30 will ensure this.
	This right of appeal to the Crown Court enables the matter to be heard all over again and a different order can be made if the Crown Court thinks fit. We have given this right to only the owner of the animals concerned and not to other interested parties who might be involved in the application under Clause 20, such as the State Veterinary Service, the police or RSPCA. We consider that the owner has the main interest in the animal, whether financial or otherwise, which needs protection. Other parties, while concerned for the welfare of the animal, do not have the same type of interest in it.
	If the court has erred in law when it makes an order under Clause 20, there are other avenues of appeal, in the form of case stated to the High Court or judicial review, which are open to all. But we want to balance the need to protect the owners' interests with the need to avoid lengthy and potentially expensive appeals in every case where there is an order under Clause 20. Ultimately, if the court makes a wrong decision and returns an animal to its owner, it is always possible to act again under the power in Clause 18 if it proves that the animal is suffering or at risk of suffering as a result. I hope it is accepted that we have the right balance here.
	Amendments Nos. 26 and 29 introduce rights of appeal against orders for the reimbursement of certain expenses. I will go into detail if noble Lords desire it, but I should at least mention each government amendment. Amendments Nos. 27 and 28 ensure that a court can make any of the orders in Clause 20(1), not just the one applied for; for example, an inspector may apply for sale of the animal, and the court may want to order that the animal be given back to the owner. Amendments Nos. 31 to 39 are matters of drafting.
	Amendment No. 29 removes the reference to an application "by way of complaint" in Clause 20 because we do not think that that is the right process in every case. It can still be used in some cases, but in others there may be several interested parties who need to give evidence so that the court can reach the right decision based on all the facts. Therefore, we think that the right approach is for rules of court to be made under the powers in the Magistrates' Courts Act 1980 to ensure that the court gives notice and an opportunity to be heard to every interested party when it hears an application under Clause 20. Exactly who is an interested party will obviously vary from one case to another, and the court hearing the application will be best placed to consider who to include. If that involves a delay, directions can be made to ensure the welfare of the animal in the mean time. I beg to move.

The Duke of Montrose: My Lords, I thank the Minister for presenting the detail of the amendments. It is good that the amendments bring in safeguards and it is as well to have a reasonable power of appeal as it is impossible to know the exact circumstances which might arise in all cases. It was interesting that the Minister emphasised that the appeal under Amendment No. 30 was for the owner only, because in the previous clause the appeal was granted to such persons as appear to the authority to represent any interests. Altogether, the amendments provide a good deal of clarification.

Baroness Miller of Chilthorne Domer: My Lords, on the day this clause was dealt with in Committee, my noble friends Lord Greaves and Lord Dholakia raised some concerns. I know that they will be very grateful to the Minister for addressing them through the amendments.

On Question, amendment agreed to.
	Clause 20 [Orders in relation to animals taken under section 18(5)]:

Lord Rooker: moved Amendments Nos. 27 to 29:
	Page 13, line 28, leave out "An order under" and insert "The power conferred by"
	Page 13, line 28, leave out "may be made" and insert "shall be exercisable"
	Page 13, line 28, leave out ", by way of complaint for an order,"
	On Question, amendments agreed to.

Lord Rooker: moved Amendment No. 30:
	After Clause 20, insert the following new clause-
	"20A ORDERS UNDER SECTION 20: APPEALS
	(1) Where a court makes an order under section 20(1), the owner of the animal to which the order relates may appeal against the order to the Crown Court.
	(2) Nothing may be done under an order under section 20(1) unless-
	(a) the period for giving notice of appeal against the order has expired, and (b) if the order is the subject of an appeal, the appeal has been determined or withdrawn.
	(3) Where the effect of an order is suspended under subsection (2)-
	(a) no directions given in connection with the order shall have effect, but (b) the court may give directions about how any animal to which the order applies is to be dealt with during the suspension.
	(4) Directions under subsection (3)(b) may, in particular-
	(a) appoint a person to carry out, or arrange for the carrying out, of the directions; (b) require any person who has possession of the animal to deliver it up for the purposes of the directions; (c) confer additional powers (including power to enter premises where the animal is being kept) for the purpose of, or in connection with, the carrying out of the directions; (d) provide for the recovery of any expenses which are reasonably incurred in carrying out the directions.
	(5) Where a court decides on an application under section 20(3)(a) not to exercise the power conferred by subsection (1) of that section, the applicant may appeal against the decision to the Crown Court.
	(6) Where a court makes an order under section 20(5)(d), the person against whom the order is made may appeal against the order to the Crown Court."
	On Question, amendment agreed to.
	Clause 32 [Deprivation]:

Lord Rooker: moved Amendments Nos. 31 to 33:
	Page 18, line 8, leave out "this section" and insert "subsection (1) or (2)"
	Page 18, line 11, leave out "this section" and insert "subsection (1) or (2)"
	Page 18, line 25, leave out "this section" and insert "subsection (1) or (2)"
	On Question, amendments agreed to.
	Clause 33 [Disqualification]:

Baroness Byford: moved Amendment No. 34:
	Page 19, line 2, at end insert ", and
	( ) from riding or driving animals"

Baroness Byford: My Lords, this is a fairly small issue which has been raised with us by the International League for the Protection of Horses. The amendment seeks to build on the new and improved provisions of owner disqualification through the courts. It would add to the list of activities currently within Clause 33(2) and seeks to correct a loophole that would allow disqualified persons to drive or ride animals—in particular, the league is thinking of horses, naturally. The amendment would ensure that when making an order the court could disqualify a person from riding or driving an animal whilst disqualified. In practice, this could prevent the original owner entering into an arrangement with a supposedly new owner, or hiring a horse out, say, from a riding station, and continuing his contact with the animal.
	I understand that the International League for the Protection of Horses has already persuaded the Scottish Executive Environment and Rural Affairs Department (SEERAD) to add the amendment to the Animal Health and Welfare (Scotland) Act 2006. I hope that under those circumstances the Minister will feel able to accept this small amendment, which could correct this oversight. I beg to move.

Baroness Fookes: My Lords, this is a most sensible suggestion. It is rather more than small, as my noble friend said. There could be some real difficulties if this is not added to the Bill, and I hope that the Minister will look favourably upon it.

Lord Rooker: My Lords, I shall break the habit of a lifetime and say that I would love to be able to accept the amendment in order to repay the co-operation and support for the Bill that has been received from across the House. Unfortunately, I am unable to do so. But I have a good reason for not being able to do so and I hope that the noble Baroness will find it acceptable.
	As the noble Baroness said, Amendment No. 34 would enable the court to impose further restrictions under the terms of a disqualification order. Accepting the amendment would result in a court being able to disqualify a person convicted of a relevant offence from being in control—albeit only temporarily—of an animal owned or kept by someone else by riding, driving or using it. The expression "using an animal" is a broad one and would give the court considerably greater power to draw up the terms of the disqualification order. There are good intentions behind the amendment—both noble Baronesses have made that clear.

Baroness Byford: My Lords, I thought the word "using" had been removed from the amendment and that it referred just to "riding" and "driving". I do apologise.

Lord Rooker: The noble Baroness is quite right, my Lords. The amendment does refer to "riding or driving". It is not the first time today that I have found an old set of notes in front of me. The last paragraph I read out is inoperative—I think that that is the language.
	I should like to talk about the intentions behind the amendment, notwithstanding what the noble Baroness has just said. We do not think it would enhance the powers that we propose to make available to the courts. The court already has the power to disqualify a person from participating in the keeping of animals and from being a party to an arrangement under which a person is entitled to control or influence the way animals are kept. We consider that the powers in Clause 33 are already very wide and allow disqualifications which are enforceable and will protect animals, so we do not think that disqualification orders can be expected to prevent every future possible opportunity for cruelty. They are meant to, and will, prevent offenders setting up relationships of care and responsibility for animals whereby those animals might suffer.
	Finally, for the avoidance of doubt, I confirm that a court may make both a disqualification order as well as a deprivation order in respect of the same case, if it so wishes. Clauses 32(1) and 33(1) both provide that deprivation and disqualification orders may be made by the court instead of or in addition to dealing with the offender in any other way. Having said that in respect of the narrow point of Amendment No. 34, I hope that the desires expressed by both noble Baronesses are met by the Bill.
	There are some government amendments in the same group. Amendments Nos. 35, 36, 53, 54 and 55 are necessary to apply the same powers to breaches of disqualification orders made under old or new legislation. The group includes four minor amendments that are necessary to correct references contained in the Bill.
	Amendments Nos. 35 and 36 amend the reference in subsection (9) to refer to an order imposed under subsection (1), which is more correct. Amendment No. 54 amends Clause 64, which deals with transitional arrangements.
	The Bill will introduce a much-needed power for the courts to order the seizure of animals from someone who is found to be in breach of a disqualification order. However, although Clause 33(9) makes it an offence to breach such a disqualification order made under the Bill, it does not make it an offence to breach an order made under the existing legislation—the Protection of Animals (Amendment) Act 1954. Clearly, we need to apply the same laws to both. Amendment No. 35 therefore plugs the breaches in the old disqualification into the offences under Clause 33(9) and into the power in Clause 34 to order seizure. I hope that that reads better in Hansard than it did when I read it out. I am sure it will, and everyone will understand that because they come from the Government, these are really good amendments.

Baroness Byford: My Lords, I thank the Minister. I am sorry about the confusion—our original amendment contained the word "using", which we removed because we realised it was far too wide. I am still slightly confused about why the Scottish rural affairs department decided to include it while it is not considered necessary here, but I have time to think about that.
	We support the government amendments and I look forward to reading Hansard. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker: moved Amendments Nos. 35 and 36:
	Page 19, line 25, after "disqualification" insert "imposed by an order"
	Page 19, line 25, leave out "(2), (3) or (4)" and insert "(1)"
	On Question, amendments agreed to.
	Clause 40 [Orders under section 32, 34, 36, 37 or 39: pending appeals]:

Lord Rooker: moved Amendments Nos. 37 to 39:
	Page 23, line 17, after "36" insert "or"
	Page 23, line 17, after "37" insert "with respect to an animal"
	Page 23, line 17, after "or" insert "an order under section"
	On Question, amendments agreed to.

Lord Rooker: moved Amendment No. 40:
	After Clause 43, insert the following new clause-
	"43A ORDERS FOR REIMBURSEMENT OF EXPENSES: RIGHT OF APPEAL FOR NON-OFFENDERS
	(1) Where a court makes an order to which this section applies, the person against whom the order is made may-
	(a) in the case of an order made by a magistrates' court, appeal against the order to the Crown Court; (b) in the case of an order made by the Crown Court, appeal against the order to the Court of Appeal.
	(2) This section applies to-
	(a) an order under section 35(1)(e) against a person other than the person subject to disqualification, and (b) an order under section 36(3)(e), 37(3)(e) or 38(1) against a person other than the offender."
	On Question, amendment agreed to.
	Clause 49 [Inspectors]:

Baroness Byford: moved Amendment No. 40A:
	Page 29, line 17, at end insert-
	"( ) Where a person, other than a state Veterinary Inspector is to be appointed under this section, that person will not present evidence without the approval of that evidence by a State Veterinary Inspector."

Baroness Byford: My Lords, we return to inspectors. I would have moved this amendment in Committee but at that stage we were under severe pressure, so I am introducing it afresh on Report. The Explanatory Notes state:
	"In practical terms, an inspector... is currently likely to be a State Veterinary Service inspector".
	While we welcome that, there are few safeguards in the Bill to ensure that the quality, training, funding and independence of those inspectors, exercising considerable powers as they will under the Bill, are satisfactory.
	I was struck by the recommendations of the EFRA Select Committee on the Bill, dated 8 September 2004—which shows what a long time we have been considering it—with regard to the RSPCA. Its report points out:
	"As currently drafted, there is nothing in the draft Bill to prevent an RSPCA inspector, or an employee of any other charitable organisation, from being appointed an inspector under the legislation, because the Secretary of State is not prevented from including them on a list of suitable persons. We have only Defra's stated intention that the list will extend to only the State Veterinary Service and local authorities. If this is indeed Defra's intention, then we recommend that it should be specified on the face of the Bill. Currently, the draft Bill effectively delegates an unlimited power to the Secretary of State to decide who may act as an inspector".
	The amendment would create a compromise between making the best use of scarce resources and involving the RSPCA in the inspection of domestic premises for welfare and cruelty offences only. However, it would ensure that, while the RSPCA inspector would carry out that investigation, the evidence gathered would have to be approved by the state veterinary inspector.
	That would not only ensure that the quality of the evidence brought forward to prosecution would be good, but also provide a deterrent to an overzealous inspector, who would know that their evidence would be subject to scrutiny. The amendment provides a bridge between the reality of scarce resources and the need to establish good standards of inspection.
	Perhaps I may bring to your Lordships' attention a letter from David Catlow, president of the BVA. It was written on behalf also of the Animal Protection Agency, the Bio-Veterinary Group, BirdsFirst, Blue Cross, the Born Free Foundation, the BVA, the Captive Animals Protection Society, Cats Protection, Dogs Trust, IFAW, the Kennel Club, the League Against Cruel Sports, the Monkey Sanctuary Trust, the PDSA and the Wood Green Animal Shelter—that is quite a list. They are seeking clarification. The letter states:
	"For example, the police indicated that they felt their role was at the more extreme end of cruelty and that they did not have the ability to take on the role traditionally carried out by the RSPCA. Similarly, Local Authority Co-ordinators of Regulatory Services (LACORS) felt that their work was primarily aimed at the licensing of activities and not dealing with pets in domestic dwellings".
	This would appear to show a relatively clear delineation between the aspects of work. I pass it to the Minister—although I do not know whether he has had it or not—to share with us today. For example, farm animals would be inspected by the State Veterinary Service, the licensing and inspection of animals would be dealt with by the local authority, while extreme violence towards animals would still be dealt with by the police and general animal welfare duties would be undertaken by the RSPCA. I do not know whether this is the Government's thinking as well but, in moving my amendment, I am trying to seek clarification.
	In the letter to Ben Bradshaw on 17 October 2006, the bodies concerned went on to say:
	"Concerns have been raised surrounding the public understanding of the differences in the legislation, in particular the secondary legislation and whether the public, let alone the enforcers, will know which laws apply where"—
	and by whom. They believe that without,
	"a clear public information campaign this is likely to be a potential problem along with the large border between England and Wales as well as the border with Scotland".
	In the opinion of these organisations,
	"there is considerable variation and inconsistency in understanding and application of current legislation".
	They are therefore concerned about the implementation and enforcement of the legislation, particularly by local authorities, which have to bear some of the initial challenges. With those few words, I beg to move.

The Countess of Mar: My Lords, I support the noble Baroness in the amendment. Like her, I am an honorary associate of the Royal College of Veterinary Surgeons.
	Recently I had a discussion with a neighbour who complained about the condition of some sheep near her. She said, "I keep reporting them to the RSPCA but they don't want to know". At that stage she was not aware that the local authority has an animal health inspector that will come out and look at the sheep and, if the inspector is unhappy about their condition, will get in touch with the State Veterinary Service. However, if you ring the State Veterinary Service directly, you are told to go to trading standards. So at the moment the situation is very confusing, and it is not very much clearer in the Bill. I hope that the Minister considers the noble Baroness's remarks very seriously because we need proper demarcation lines. The public need to understand to whom they can complain if they are concerned about an animal welfare problem.

Lord Rooker: My Lords, on that latter point I absolutely agree. I suspect I shall not be able to deal with it now, but I shall get it looked into. There is clarity—we are passing legislation—and the example given by the noble Countess would, I hope, not affect many people, but it would affect some. People should not be pushed from pillar to post. It is also important that the right language is used, because there are different departments and they are not always called the same in each local authority. The State Veterinary Service needs to be aware of that when it gives information to the public.
	I have just reread the part of my briefing headed "purpose and effect", which is always useful and sometimes even better than the speaking notes, because it explains the amendment in a more encapsulated way. That is useful particularly in a complicated area such as this one.
	Clause 49 defines the term "inspector" for the purposes of the Bill. An inspector will be an officer of either a local authority or an "appropriate national authority". In practice, an inspector of the appropriate national authority is likely to be a State Veterinary Service inspector. Only those inspectors and police constables will be able to exercise the powers of entry, search and seizure under the Bill.
	Clause 49(2) will require local authorities to have regard to any guidance issued by the appropriate national authority when they appoint their inspectors for the purposes of the Bill. We anticipate that this guidance will set out relevant criteria for appointing inspectors—qualifications, experience and so on—and may include a list of approved people who are considered suitable for such an appointment.
	Amendment No. 40A would require any inspector appointed under Clause 49 not to present evidence without the approval of that evidence by the State Veterinary Service. We are not clear, which is why we need to have some discussions about it, whether the amendment is suggesting that local authority officers cannot present evidence without the evidence being approved by the SVS, or just inspectors appointed by a national authority. In practice, under the Bill, an inspector will either be an officer of a local authority or an SVS inspector. A local authority could appoint someone on a temporary or part-time basis. Persons appointed on such a basis would be authorised officers of the local authority, and the authority would still be responsible for their actions.
	This amendment would result in a lot of unnecessary administrative work for the SVS. It is based on the false assumption that local authority inspectors do not have the sense to recognise when they need to obtain advice from a veterinary surgeon. We think it fails to understand that much of the work a local authority inspector does is well within the competency of a lay person and that input from a veterinarian is not needed. Where, in the course of an application to a court or a prosecution, evidence from a veterinarian is necessary, that will need to be obtained and presented to the court. In some cases it will be appropriate for that vet to be an employee of the SVS. In other cases, a private vet may be the right person. I hope that that gives clarification.
	We are currently looking at the protocol between the police, the RSPCA, local authorities and the State Veterinary Service. We do not anticipate any changes in how the law is currently enforced. We are satisfied that we have a clear perception of what their various roles are, notwithstanding the points I have made. I thought it was worth putting that on the record. In the short time available before Wednesday, or whatever day we have down for Third Reading, I will get some clarification, particularly on the example I was asked about by the noble Countess.

Baroness Byford: My Lords, I am grateful to the Minister. As I explained to noble Lords, we had intended to raise this in Committee. It is one of the issues I raised when we had a chance to meet the Minister and his team, but perhaps they did not fully understand what I was after. There is also the question of funding. Local authorities have to make the best use of the money available to them, and some local authorities might consider this a much less important issue than others.

Lord Rooker: My Lords, we do not think the Bill will impose additional financial burdens on local authorities. The costs of running the additional licence system should be balanced by the cost of obtaining a licence, which will be set locally to ensure that the administrative costs are met. The Defra database should provide an additional enforcement tool for inspectors. Resources should not be a problem, or indeed be used as an excuse for lack of action.

Baroness Byford: My Lords, I am grateful for that clarification. I am glad to have it on the record. The Minister has kindly offered to talk to us again, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 2 [Powers of entry, inspection and search: supplementary]:

Lord Rooker: moved Amendment No. 41:
	Page 40, line 5, after first "to" insert "the issue of"

Lord Rooker: My Lords, in speaking to this amendment I shall also speak to government Amendments Nos. 42 to 48, which are grouped with it. They are largely technical and ensure consistency with the Serious Organised Crime and Police Act, which came into force in July 2005. In addition, Amendment No. 48 gives limited powers of search and seizure to inspectors who enter premises in an emergency.
	Amendments Nos. 41 to 47 are minor amendments—although Amendment No. 46 looks like a significant change—purely to ensure consistent drafting. They make no substantive changes. Schedule 2 extends the safeguards in Sections 15 and 16 of the Police and Criminal Evidence Act to inspectors under the Bill. The Serious Organised Crime and Police Act made a few changes to Sections 15 and 16, and so a few equivalent changes to Schedule 2 are necessary to take account of this. I am happy to go through other amendments in detail.
	Amendment No. 48 serves two purposes. The first is to ensure that where an inspector enters premises to search for an animal in distress he has the power to inspect the animal when he finds it. This is a necessary prerequisite to exercising all the emergency powers in Clause 18 and I do not think that I need dwell further on it. The second purpose is to give inspectors limited powers to gather evidence. As currently drafted, the power to remove carcasses and take photographs is limited to occasions when the inspector has entered either under warrant under Clause 22, or to conduct a routine inspection under Clauses 25 to 28.
	However, where an inspector has entered to search for an animal in distress he may find it has already died, or that it needs to be destroyed. In both cases he will need to remove the carcass, as a post-mortem examination will be necessary for any subsequent prosecution that may be brought. Likewise, he may need to photograph the conditions the animal has been kept in for use as evidence in any future prosecution.
	We recognise that if an inspector has already entered the premises using his Clause 19 powers, then to have to leave, obtain a warrant under Clause 22, and return again would not only be impractical and a waste of resources, but would also risk evidence being destroyed. These amendments are intended to ensure that he can exercise these limited evidence-gathering powers, even though he has entered primarily for the purpose of alleviating an animal's suffering. On that basis, I beg to move.

On Question, amendment agreed to.

Lord Rooker: moved Amendments Nos. 42 to 48:
	Page 40, line 5, leave out "issued"
	Page 40, line 6, after "to" insert "the issue of"
	Page 40, line 7, leave out "issued"
	Page 40, line 7, at end insert-
	"( ) In their application in relation to the issue of a warrant under section 19(4) or 22(1), sections 15 and 16 of that Act shall have effect with the following modifications.
	( ) In section 15-
	(a) in subsection (2), omit the words from the end of paragraph (a)(ii) to the end of paragraph (b); (b) omit subsections (2A) and (5A); (c) in subsection (5), omit the words from "unless" to the end; (d) in subsection (6)(a), omit the words from the end of sub-paragraph (iii) to the end of sub-paragraph (iv); (e) in subsection (7), omit the words from "(see" to the end.
	( ) In section 16-
	(a) omit subsections (3A) and (3B); (b) in subsection (9), omit the words after paragraph (b)."
	Page 40, line 8, leave out sub-paragraphs (2) to (4) and insert-
	"1A (1) This paragraph and paragraph 1B have effect in relation to the issue to inspectors of warrants under section 27(4); and an entry on premises under such a warrant is unlawful unless it complies with this paragraph and paragraph 1B.
	(2) Where an inspector applies for a warrant, he shall-
	(a) state the ground on he which he makes the application, (b) state the enactment under which the warrant would be issued, and (c) specify the premises which it is desired to enter.
	(3) An application for a warrant shall be made without notice and supported by an information in writing.
	(4) The inspector shall answer on oath any question that the justice of the peace hearing the application asks him.
	(5) A warrant shall authorise an entry on one occasion only.
	(6) A warrant shall specify-
	(a) the name of the person who applies for it, (b) the date on which it is issued, and (c) the enactment under which it is issued.
	(7) Two copies shall be made of a warrant.
	(8) The copies shall be clearly certified as copies.
	1B (1) A warrant may be executed by any inspector.
	(2) A warrant may authorise persons to accompany any inspector who is executing it.
	(3) A person authorised under sub-paragraph (2) has the same powers as the inspector whom he accompanies in respect of the execution of the warrant, but may exercise those powers only in the company, and under the supervision, of an inspector.
	(4) Execution of a warrant must be within three months from the date of its issue.
	(5) Execution of a warrant must be at a reasonable hour unless it appears to the inspector executing it that the purpose of entry may be frustrated on an entry at a reasonable hour.
	(6) Where the occupier of premises which are to be entered under a warrant is present at the time when an inspector seeks to execute it, the inspector shall-
	(a) identify himself to the occupier and shall produce to him documentary evidence that he is an inspector, (b) produce the warrant to him, and (c) supply him with a copy of it.
	(7) Where-
	(a) the occupier of premises which are to be entered under a warrant is not present when an inspector seeks to execute it, but (b) some other person who appears to the inspector to be in charge of the premises is present, sub-paragraph (6) shall have effect as if any reference to the occupier were a reference to that other person.
	(8) If there is no person present who appears to the inspector to be in charge of the premises, he shall leave a copy of the warrant in a prominent place on the premises.
	(9) A warrant which-
	(a) has been executed, or (b) has not been executed within the time authorised for its execution, shall be returned to the designated officer for the local justice area in which the justice of the peace who issued the warrant was acting when he issued it.
	(10) A warrant which is returned under sub-paragraph (9) shall be retained by the officer to whom it is returned for 12 months from its return.
	(11) If during the period for which a warrant is to be retained the occupier of the premises to which it relates asks to inspect it, he shall be allowed to do so."
	Page 42, line 14, leave out "the" and insert "any"
	Page 43, line 2, at end insert-
	"Functions in connection with entry under section 19
	(1) Where a person enters premises in exercise of a power of entry conferred by section 19(1), or by a warrant under section 19(4), he may-
	(a) inspect an animal found on the premises; (b) remove a carcass found on the premises for the purposes of carrying out a post-mortem examination on it; (c) remove for those purposes the carcass of an animal destroyed on the premises in exercise of power conferred by section 18(3) or (4); (d) take a photograph of anything on the premises.
	(2) Where a person exercising a power of entry under section 19(1) takes another person with him under paragraph 3, the other person may exercise any power conferred by sub-paragraph (1) if he is in the company, and under the supervision, of the person exercising the power of entry."
	On Question, amendments agreed to.
	Clause 59 [Orders and regulations]:
	[Amendments Nos. 49 and 50 not moved.]

Lord Rooker: moved Amendment No. 51:
	Page 33, line 14, at end insert-
	"(2A) No order under section 17(1) shall be made by the Secretary of State unless a draft of the instrument containing the order has been laid before Parliament.
	(2B) Subsection (2A) does not apply in relation to an order revoking a code of practice in connection with its replacement by a new one."
	On Question, amendment agreed to.
	Schedule 3 [Minor and consequential amendments]:

Lord Rooker: moved Amendment No. 52:
	Page 45, line 18, leave out "36" and insert "36(1)"
	On Question, amendment agreed to.
	Clause 64 [Transition]:

Lord Rooker: moved Amendment No. 53:
	Page 35, line 4, at end insert-
	"(3) Section 33(9) shall apply in relation to a disqualification imposed by an order under section 1 of the Protection of Animals (Amendment) Act 1954 (c. 40) (power to disqualify persons convicted of cruelty to animals) as it applies in relation to a disqualification imposed by an order under section 33(1).
	(4) In relation to a person convicted of an offence under section 33(9) by virtue of breaching a disqualification imposed by an order under section 1 of the Protection of Animals (Amendment) Act 1954 (c. 40), section 34(2) shall have effect with the substitution for the words from "owning" to "keeps" of "having custody of an animal in breach of disqualification under section 1 of the Protection of Animals (Amendment) Act 1954, the court by or before which he is convicted may order that all animals of which he has custody".
	(5) Section 42 shall apply in relation to a person who is disqualified by virtue of an order under section 1 of the Protection of Animals (Amendment) Act 1954 (c. 40) as it applies in relation to a person who is disqualified by virtue of an order under section 33 or 41.
	(6) In its application by virtue of subsection (5), section 42(2)(c) shall have effect with the omission of the words "section 33(6), 41(3) or"."
	On Question, amendment agreed to.
	Clause 65 [Extent]:

Lord Rooker: moved Amendments Nos. 54 and 55:
	Page 35, line 12, leave out "64" and insert "64(1) and (2)"
	Page 35, line 41, leave out "64" and insert "64(1) and (2)"
	On Question, amendments agreed to.

Tax Credits

Lord Northbrook: rose to ask Her Majesty's Government whether the operation of the tax credits system is satisfactory.
	My Lords, I am grateful to have the opportunity for this debate on whether the operation of the tax credit system is satisfactory. The new tax credits—the child tax credit and the working tax credit—were introduced in April 2003. The most recent parliamentary review of them by the House of Commons Treasury Select Committee was published in June this year. It is a cross-party document, and I have taken it as the best non-partisan source for my remarks tonight. I will cover three problem areas that are highlighted in particular: first, overpayment of the credit to claimants; secondly, fraud and organised crime; and, thirdly, the way forward to improve the system.
	The Government state that the tax credit regime provides support for 6 million families and 10 million children. However, in 2003-04 about one-third of all tax credit awards paid—nearly 1.9 million awards—were overpaid at a cost of nearly £2 billion. In December 2005, the Paymaster General indicated that, but for reforms announced in the Pre-Budget Report 2005,
	"initial estimates had suggested that subsequent years' overpayments would have been of broadly the same level as in 2003-04".
	I am not certain if the overpayment figures for 2004-05 and 2005-06 have been published yet. Will the Minister give me those figures? For 2003-04, of the 1.879 million claimants who received overpayments, about 41,000 received overpayments of £5,000 or more. Half the total overpayments related to some 283,000 families, who had been overpaid by £2,000 or more.
	The National Audit Office explained why the design of tax credits necessarily results in overpayments. It said,
	"A tax credit award is provisionally based on a family's income and circumstances from the preceding tax year. The award is finalised after the end of the tax year once income and circumstances are known for certain. The final award will be lower than the provisional award where incomes increase, although the first £2,500"—
	now up to £25,000—
	"of any income increase is disregarded".
	However, the NAO also stated:
	"Further unforeseen overpayments have occurred".
	Full recovery of overpayments from 2003-04 is expected to take nearly five years. To date, the Government have written off some £95 million of overpayments and have made provision for a further £961 million to be written off eventually. The committee says that the factors cited by the Paymaster General and her officials as contributing to the causes of overpayments do not give the full reasons why the overpayments have arisen. The Paymaster General has referred only to those causes of overpayments that can be attributed to error by the claimant, or omission, or to the design of the tax credits regime, or a combination of those. The Paymaster General, in the committee's view, makes no reference to causes of overpayments that have arisen due to HMRC's own processes—for example, official error and information technology system error. Does the Minister agree with the committee's conclusions?
	The report goes on to state that recent research indicates that the tax credits regime, which is designed to deliver the correct amount of state assistance over the year as a whole, could be aligned more closely to the financial needs of those families who tend to and need to budget over a month or less, rather than the whole of a tax year. The committee goes on to say that it is obvious that HMRC cannot, however, as a whole take steps to improve the way that it administers tax credits without first identifying and developing a detailed understanding of the factors that cause overpayments and the extent to which each individual factor has contributed to the overpayments problem. It recommends that as a priority the Government should provide a detailed breakdown of as much of that information as is currently available. Does the Minister agree, and will he provide the House with the necessary information?
	The committee is clear that official error has been a cause of overpayments in a significant number of cases. The Paymaster General has said that no complete analysis exists of official error causing or contributing to overpayments. In my view, that is a significant gap in HMRC's understanding of the reasons that overpayments arise. Does the Minister not agree with the committee's view that if HMRC is to succeed in improving the administration of the tax credits regime, it first needs to understand what is going wrong within its own processes before it looks to problems elsewhere? Does he not agree also with the committee's argument that the Government should undertake a complete analysis of the incidence of official error and the extent to which that causes or contributes to overpayments, that they should publish that analysis, and that if they cannot carry out such analysis, they should explain why?
	The committee also believes that HMRC has failed to assess the contribution made by information technology error. It recommends that the Government undertake a complete analysis of the incidence of that and the extent to which it causes or contributes to overpayment, and that they publish that analysis. Does the Minister agree?
	The IT system delivered by EDS for running the new tax credits system was unsatisfactory in several respects, as was highlighted by the NAO's evidence to the committee. Yet, when the Government ended the contract with EDS in June 2004, an extraordinary agreement was made. While the Government were to be compensated for EDS's mistakes by £71.25 million, up to £26.5 million of that, in staged payments, would be contingent on EDS winning new business with the UK Government. But there was no guarantee that EDS would win sufficient business to trigger payment of the full amount.
	The committee strongly questioned the wisdom of an agreement that made the payment of compensation to the affected government department by the provider of that unsatisfactory service contingent on that provider winning other contracts with the Government. The committee's concern, rightly, is that contingent payments will influence future decisions by government departments to award contracts. It believes that:
	"The agreement has the appearance of impropriety, if not the fact".
	Will the Minister say whether the full £26.5 million has been received and how many government contracts have been awarded to EDS since June 2004?
	On the recovery of overpayments, I agree with the committee that HMRC should not seek to recover either an excess payment made in the current year or an overpayment from the previous year until it has come to a decision on whether the excess should be recovered, in accordance with COP 26, which requires two questions to be answered satisfactorily: did HMRC make a mistake and, if so, was it reasonable for the claimant to think that his or her payments were correct? Why do the Government appear to be delaying implementation of the "pause before recovery" of an overpayment? In any case, is there not a statutory right of appeal to a tribunal, under Section 12 of the Social Security Act 1998? Does the Minister support calls from the voluntary sector and the ombudsman for the introduction of an appeal to an independent tribunal?
	On the subject of fraud, error and organised crime, I am concerned, as is the committee, that it is now over two years since the end of the 2003-04 tax year, yet HMRC has yet to establish the final levels of claimant error and fraud in the tax credits regime for that year. An interim figure of 3.4 per cent has been indicated, but the committee understands that the figure will be significantly higher.
	Apparently, organised criminals were able to make claims over the internet without proving their identity. However, HMRC's internal office concluded that there was a lack of comprehensive information to allow a robust analysis of the problem. Then, in December 2005, HMRC announced the closure of its tax credits portal, following attempts to defraud the tax credits regime by making claims through it. Those claims falsely used internal information held by DWP about its staff. The Paymaster General admitted in February 2006 that some 8,800 staff identities may have been stolen in 2003-04. Of those, 6,800 had been used in an attempt to defraud the tax credits regime in 2005.
	The Paymaster General gave details of another fraud, involving the use of identities stolen from Network Rail employees, stating that HMRC's investigations had resulted in at least 16,000 claims being stopped. The Paymaster General also disclosed that, from April 2004 to November 2005, HMRC intervened on approximately 56,000 incorrect claims where fraud was suspected, of which HMRC estimated that 19,500 arose as a result of organised attacks. From October 2004 to November 2005, HMRC identified and stopped over 22,000 tax credit claims in payment where organised fraud was suspected.
	Does the Minister have any updated figures of the loss to HMRC due to fraud, other than the figure of £2.7 million from the DWP fraud and the £15 million general figure from organised fraud as stated by the NAO in the committee report? Can he guarantee that there are no plans to reduce the number of staff in the tax credits compliance department of HMRC?
	My final subject on the report is the way forward. I welcome the fact that the Government are seeking to improve the operation of the tax credits regime by introducing a package of reforms. However, how can they be confident of their estimates of the overall costs of the package? For instance, they expect the package to be broadly revenue neutral, but how will this be when the disregard threshold is being increased from £2,500 to £25,000, which could prove costly?
	We on these Benches believe that HMRC should improve its service to claimants. We want the tax credits system to work properly so that those who are most deserving benefit from it. We want to make the system as user-friendly as possible so that no one will be put off by its complexity and we want its administration to be as efficient as possible. Therefore, I commend the Treasury Committee report and look forward to the Minister's response.

Baroness Hollis of Heigham: My Lords, I think that I would like to thank the noble Lord, Lord Northbrook, for his introduction to this short debate tonight. He is certainly right to bring to the House's attention some of the ongoing concerns surrounding tax credits, which we all recognise are a powerful government tool to address child poverty—it is a tool of which I, for one, am very proud.
	Tax credits probably would not have been necessary in Beveridge's time, but now that wages are individual wages and not family wages—rightly so, given changing demography, lifestyles and family patterns, as well as the fluidity of family forms and of labour—the state, rightly in my view, takes responsibility for additional payments where necessary to reflect family need and family dependency. That started with Eleanor Rathbone's family allowances in 1948, going through to the family income supplement, which was introduced by the party opposite, to family credit, and now to tax credit.
	If I have any criticism of the speech of the noble Lord, Lord Northbrook, it is that he did not contextualise it by suggesting in any way the extent to which tax credits have begun to bridge some of the gaps in after-pay earnings between rich and poor and between the childless and families with children. Tax credits also, rather interestingly, bridge the gap between entry wages and median wages; the 40 per cent difference between the two is one of the biggest gaps in Europe, so tax credits help to sustain people who are in low-paid jobs. Tax credits also bridge the gap between women's full-time and men's full-time work, and between women's part-time and men's full-time work—we know that pay rates for women's part-time work are roughly 50 per cent lower than pay rates for men.
	In all these problems in the distribution patterns in our society, tax credits have made a major contribution. But, as is inevitable in any such redistribution, there will be trade-offs that conflict with each other. I shall describe two of the most complex. First, if you make out-of-work benefits sufficiently generous—especially for larger families, in tackling child poverty—you can make it more problematic for people to find it worth while to go into work. That is why in the 1970s we had the wage stop. We call that situation the poverty trap, in which it is not worth working. The second problem is that, as tax credits are rightly related to income, and therefore withdrawn as income rises, there can be a very high deduction rate, along with tax and NI, for every extra pound earned. That is what we call the employment trap. Of course, one could reduce the taper and make it less severe, but then the problem moves higher up the income scale. In any case, the problem is not the taper but the interaction with other means-tested benefits—above all, housing benefit and council tax benefit.
	There are no right answers to this, just judgments to be made about how we trade the one problem off against the other. It is worth stating that some of those concerns may be more theoretical than real. On the poverty trap, for example, it is clear from research that people work for more than money: they work for adult status, autonomy, pride and family responsibility. As a result, the reserve wage that a number of people will take is amazingly low—often barely at benefit level—and that will be sufficient to bring them into the labour market. However, if a job is difficult to sustain around fluctuating childcare problems and if the pay is not good enough, a lone parent in particular is more vulnerable to dropping out of the labour market. The Institute for Fiscal Studies has shown that over the past 10 years or so, the levels of both the poverty trap and the employment trap have been reduced, largely due to tax credits.
	As for the problem of tapers and the complaint that, once in work, too much of each pound that a person earns goes in deductions, you obviously cannot simply universalise the benefit and then take it away from the better off. The income tax bands are not sufficiently progressive and it would be too expensive to do that. In 1997, I estimated that putting £10 on each and every benefit would wipe out almost the entire expenditure on the NHS, as it stood at that time, and still leave families poor. It cannot be done in that way.
	The result is that we have constructed a tax credit system which, rightly I think, has a sharp taper for adults—the working tax credit—and a shallower taper for children. In its recent report, the Institute for Fiscal Studies has shown that both incentives to work and progress within work, though varying by family type, have largely improved satisfactorily over the past few years.
	Therefore, the first problem is the generalised one of targeting, means-testing, the poverty trap and the employment trap. I was sorry that the noble Lord, Lord Northbrook, did not refer to that in his otherwise very detailed and analytical speech.
	The second problem, to which he devoted most of his time, is what the Opposition, and he today, have called "errors". It is fair to say that when we introduced the Tax Credits Bill we did not predict that 50 per cent of lone parents would undergo more than a dozen changes in circumstance a year. Those include changes in childcare arrangements virtually every school holiday, changes in hours worked and sometimes a change of partner. The result is that if, as the noble Lord suggests, you seek to track every change and every three to four weeks change the credit for half the population claiming tax credits, even if the computer could handle it, I doubt very much whether the lone parent could. Such adjustments would be made six weeks in arrears and there would be no way in which that parent would be able to construct a family budget with such unreliable and non-robust flows of income, especially as some of the changes in circumstance cancel each other out.
	That is why the Government, rightly in my view, went for a balance-sheet adjustment at the end of the year. The problems occurred disproportionately because, again, I think that the Government underestimated the occasions on which the female in a couple household went into work and produced a major increase in family income—often used to pay off the debts acquired by the couple over the previous years—but that was not reported early enough. Therefore, at the end of the year, the couple faced a very large overpayment bill, which the departments involved rightly sought to reclaim. It is a fact of human nature that people are much more likely to report a drop than a rise in income. The Government increased the head space from £2,500 to £25,000 so that in the one year in which the female goes back to work the couple is not bedevilled by these problems—it may be the one opportunity that they have to pay off their debts. Simultaneously, the Government also require monthly, as opposed to three-monthly, reviews of information. I hope that those measures together will address the problem.
	As for errors in the conventional sense, mentioned by the noble Lord, I was amazed at how few there are. Something like 95 per cent of the poorest families—lone parents—claim their entitlement. There is something like a 98 per cent accuracy rate, which is amazingly good.
	I have three questions for my noble friend. The first concerns the problems associated with larger families. Half of all poor children live in larger families—not necessarily one-parent families, but often couple families who are out of work, or black, minority ethnic families. Yet in Britain we concentrate benefit and support on the first child. In most of Europe, more money goes to later children in the family. Will my noble friend tell us the Government's thinking on introducing either a later-child premium or some balancing factor, so that that problem can be addressed? The Institute for Fiscal Studies has shown that that would be the single most effective tool in simultaneously reducing out-of-work poverty for children and increasing in-work incentives for parents because they would continue to take that premium into work with them. I hope that my noble friend can give us some good news on that.
	My second question for my noble friend is whether grandparents who provide childcare might be eligible for the childcare tax credit. At the moment it goes only to registered childminders, but the real test for a lone parent on whether she is willing to go into work and sustain work when it gets difficult—if the child is sickly or if there are difficulties in hours—is whether she has childcare that she can trust, that she is confident in and that will hang on in. That is usually childcare of the sort that she would give, provided by someone who loves the child, so that the mother is guilt-free. That often means childcare by her own mother. Those grandparents may themselves have been lone parents, often living in poor estates. Such a measure would allow us to help three generations of families: the women in their 50s who need to work, their daughters who seek work and their children whom we must lift out of poverty. What is my noble friend doing on that?
	Finally, we have a national minimum wage and national levels of tax credits. Yet we all know that the cost of living, transport and housing varies widely within the UK between the south-east and other regions. Has the Government's thinking moved at all on a regional premium on the minimum wage or on tax credits? If so, what will happen?
	Tax credits have been transforming for families—particularly for lone parents. A young mother with a child who would be earning barely £5 or just above on a minimum wage can take home a man's wage—double that. Because she has a tax credit that makes working pay, and a child tax credit that is earnings related, which means it keeps pace with rises in real wages, we have been able to transform the opportunities for lone parents and their children. Tax credits are a government measure of which I am hugely proud, which along with the introduction of the minimum wage have been transforming for parents and children alike.

Viscount Trenchard: My Lords, I am most grateful to my noble friend Lord Northbrook for introducing the debate on tax credits. My gratitude is without the reservation shown by the noble Baroness, Lady Hollis.
	I am surprised that it has taken so long for the public at large to ascertain just how inefficient and wasteful is the absurdly complex system of taxes, tax credits and benefits that the Government have introduced. The Government spent £15.4 billion on tax credits in 2006-07 compared with £2.4 billion spent on family credit in 1997-98. The increase in expenditure is equal to more than 4p on the basic rate of income tax. Will the Minister tell us the total cost in the past year of administering the tax credit system, including reclaiming overpayments? Further, will he tell the House what that sum would translate to in terms of the basic rate of income tax?
	As proposed by my noble friend Lord Forsyth of Drumlean, and his Tax Reform Commission in an excellent report published last week, the need for tax credits could be reduced by increasing the personal allowance and making it transferable between parents of young children. The tax credits system is so complicated as to be incomprehensible to most people, and a severe disincentive to those in work but on low incomes to work harder and earn higher salaries or win promotion, because the progressive withdrawal of tax credits has created an effective marginal rate of 70 per cent or more for many workers. As the Institute for Fiscal Studies has pointed out, the weakest work incentives are encountered by people on low incomes who face having their means-tested benefits or tax credits withdrawn if they increase their income. More than 2 million workers in Britain stand to lose more than half of any increase in earnings to taxes and reduced benefits. Some 160,000 would keep less than 10 pence of each extra pound they earned.
	Tax credits have provided some incentive for people to move from unemployment into low-paid employment. However, as the report of my noble friend Lord Forsyth pointed out, they are not well focused on reducing poverty. The noble Baroness, Lady Hollis of Heigham, has claimed that tax credits have made a great contribution to reducing the gap between rich and poor, and between men and women. However, child tax credits can be claimed by families earning nearly three times the average national income. The poorest fifth of households are therefore paying a higher share of tax, and receiving a lower share of benefits, than they were when the Government came to power. As my noble friend Lord Blackwell pointed out in his excellent paper, Take Poor Families Out of Tax, published in October last year, a further disadvantage of the tax credits system is that, since credits are calculated on the previous year's income, many families find that their income fluctuates widely. If their income rises, they may find themselves faced with an unexpected and unaffordable bill to pay back credit payments which they have already spent.
	This inefficient system has created a serious and expensive problem of benefit fraud. For three consecutive years, the extent of overpayments due to error or fraud has led the National Audit Office to qualify its audits of taxes and tax credits. My noble friend Lord Northbrook has already well illustrated this point.
	"Tax credits" is a misnomer. These benefit payments are not credits against taxes. The Government massively overtax low-income families and then, at enormous administrative cost, give money back to the same people. In the process, they create a demotivating dependency culture and remove—or substantially dilute—incentives for people to better themselves.
	There is, or was, another kind of tax credit: dividend tax credits. Mr Liam Halligan, economics editor of the Sunday Telegraph, said in his excellent article of 15 October that Terry Arthur, a fellow of the Institute of Actuaries, supported by Watson Wyatt, calculates that the Chancellor's first and worst stealth tax raid, the abolition of dividend tax credits—real credits against corporation tax—had actually cost pension schemes up to £150 billion. The Minister may, or may not, remember that, in the debate on the Loyal Address on 18 May last year, I estimated that the stealth tax raid had actually cost some £166 billion. I am no actuary, but I feel I am in good company now.
	Against the background of changing demographics, the Chancellor's raid on our pension funds was the largest single factor leading to the present crisis in retirement provision. It is therefore all the more necessary to cast away the cumbersome, wasteful and highly inefficient scheme of working tax credit and child tax credits without delay and use the savings to procure a substantial increase in the personal tax allowance to, say, at least £7,500, transferable between spouses, thus freeing millions of people from the burden of paying tax at all. It will be hard for the Minister to claim that the operation of the tax credit system is satisfactory, and I look forward to his reply.

Lord Giddens: My Lords, tax credits do not seem to be bringing out noble Lords in droves, especially during their dinnertime, but I shall be less diffident than my noble friend Lady Hollis in thanking the noble Lord, Lord Northbrook, for initiating this debate. Tax credits may not be in the foxhunting league, but their impact on the country is much greater.
	Tax credits have a long history. They were initiated in the United States in the 1970s by Senator Russell Long. They began as a relatively uncontroversial, small scheme of incentives to get to people into work. They were generalised during the Clinton Administration, and they effectively became a very large anti-poverty programme. As the noble Lord mentioned, tax credits have been used for many other purposes—for example, President Clinton introduced environmental tax credits—but I shall speak mainly on the relationship between tax credits and the alleviation of poverty because that is where they are most important.
	If we look at the record of the Clinton Administration, the impact of tax credits was immense. They were the main reason why approximately 10 million people were lifted out of poverty during his period in power. At the end of that period, the number of people below the poverty line in the United States was the lowest it had been for 25 years. In the United States, it was a very successful policy, and it is not surprising that it was initiated here, albeit under a different name: the working families' tax credit.
	As my noble friend Lady Hollis said, tax credits are a powerful instrument. That is so for several reasons, and it is important to bear them in mind when discussing issues of complication, overpayment and so forth. First, they are non-stigmatising. They are not perceived, as orthodox, passive benefits often are, as stigmatising to the people who claim them and to the rest of the population who fund them. That is an important quality of tax credits compared with orthodox benefit payments. Secondly, they are a positive incentive for job search and job creation more generally. When Senator Long introduced tax credits, they were a reaction against Milton Friedman's negative income tax, one of the problems of which was that it would effectively have acted as a disincentive to work, unlike tax credits. Thirdly, tax credits connect social policy and economic policy. That is why they have been such an important element of government policy. They get a lot of people into work and alleviate poverty at the same time because we know the best way of doing that is to get people into jobs. At the same time, they directly contribute to economic dynamism. There are very few social policies that do both those things.
	The record of this country in job creation and employment is substantial. Some of the major EU economies, such as France or Germany, have about 64 or 63 per cent of the labour force in work. In the UK, about 74 per cent of the labour force is in work—one of the top figures not only in the EU but among OECD countries. That is crucial, because it generates the tax revenue that makes possible investment in public services.
	A fourth reason why tax credits are so important is that, unlike many other benefits systems, they have a proven track record. They have been used in the United States for quite some time and a large number of studies show that they work: they benefit some of the poorest sectors of society and, crucially, they provide an important and direct incentive for job search and job creation.
	One must concede, as my noble friend Lady Hollis conceded, that there are problems with tax credits. The question is whether those problems are, in the light of what the noble Lord, Lord Northbrook, said, structural or the result of how they are implemented. That is crucial. One should recognise that all benefits have problems. Again, as my noble friend said, if you have a straightforward universal benefits system, the problem is that a lot of money goes to people who do not really need it. There will always be problems and dilemmas in the relationship between targeted and universal benefits. No system is perfect.
	The first problem, much discussed in the British press recently, is that of overpayment. It is best to look to the United States to see whether that is a structural problem or whether it is largely the result of the computer system—or, I think one must say, mistakes made. The evidence from the United States is pretty clear. There was overpayment in the beginning in the United States. That has been radically reduced. There was a lot of fraud initially in the United States, but that has been radically reduced. There is still some overpayment in the US, but it is much less than it was. That leads me to conclude that overpayment is not primarily a structural problem of tax credits and that we should be following the same procedures as have been instituted in the United States to reduce those problems.
	The second issue, also mentioned by noble Lords, is the fact that the tax credits are complicated and difficult to understand. If I may say so, one must have a nuanced view of that. Simplicity is of course a virtue, but it is not the sole virtue of a tax system, especially when we recognise the crucial fact that fiscal systems have an impact on behaviour. That is a crucial aspect of what tax credits do. Much more important than sheer simplicity is whether they do the job of bringing the money to the right people in the right way at the right time. I take it that that was the point raised by the noble Lord. I think that we must have a flexible system. Therefore, I am not in favour of the proposal that seems to have been made by the Liberal Democrats of having a six-month stable payment. Because poverty is so complex and changes so much even during the course of a year, you must have a flexible system. One of the main things that we have discovered about poverty is that it is not a unitary state. Poverty has so many different faces and any system must be tailored to that.
	Thirdly, we must be careful that the old poverty traps do not return. That can happen if tax credits are not properly adjusted as times and income levels change. We know that the old poverty traps put poorer people in a terrible situation of having a much higher marginal rate of taxation than more wealthy people. There is a danger that the tax credit system can drift towards that as well if we do not modify it as it goes along. I would like to hear the Minister's comments on what has been said by members of our party, such as Alan Milburn, who has expressed reservations from that point of view and, perhaps, on the recent Rowntree report, which also expressed reservations about that. That is an important part of the debate.
	However, I very much diverge from the noble Lord over tax credits. I think he would have to look very hard to find another system that links together increasing social justice, economic dynamism and employment in a single-policy system. It would be a great mistake to disentangle them, which is why I was very pleased to hear the noble Lord, Lord Northbrook, say that he fully supported the idea of tax credits in principle. I think that is what he said.
	Finally, anyone can make a mistake about tax systems and fail to understand them. I leave noble Lords with this little story. A tax inspector goes to see a businessman with a multi-million pound business. He knocks on the office door and says, "I'm the man from the VAT". The businessman behind the desk says, "You're a bit premature. I haven't decided whether I will join yet".

Lord Oakeshott of Seagrove Bay: My Lords, this has been a short debate but one that shows some of the strengths of this House. We have had a good range of people talking about practical difficulties in the system, as well as with great expertise about its more theoretical aspects.
	I congratulate the noble Lord, Lord Northbrook, on keeping this problem in front of us and on continuing to try to hold the Government to account. He painted a serious picture, which I believe is correct, of continuing inefficiency, overpayments, underpayments, error and fraud in the tax credits system.
	The noble Baroness, Lady Hollis, spoke with her unique combination of commitment and expertise, and I will certainly develop her argument about the employment and poverty trap and about the effect of housing and other benefits. I do not, however, agree with the thrust of her summary of the very important Institute for Fiscal Studies report, supported by the Joseph Rowntree Foundation, about which I propose to say a little more.
	The noble Lord, Lord Giddens, also gave us a useful historical sweep, but I cannot agree that tax credits are not a disincentive to work. A careful study of the IFS report would make him think very hard about that. Briefly, he spoke about the Liberal Democrat proposals to re-fix tax credits every six months. I agree that flexibility is fine, and obviously one would like the system to work better. The problem at the moment is that the system seems to be seizing up, and re-fixing tax credits every six months is a short-term practical proposal to help.
	The noble Viscount, Lord Trenchard, concentrated on administrative costs and reclaiming overpayments, and followed the main thrust of the noble Lord, Lord Northbrook. I notice that he called the Forsyth commission's report excellent. Is the noble Baroness, Lady Noakes, allowed to agree with that from the Conservative Front Bench, or would it break Mr Osborne's vow of silence? He seems to have invented a whole new concept. Noble Lords may remember that the Chancellor of the Exchequer used to go into pre-Budget purdah for a few weeks. The new Osborne doctrine seems to be that shadow Chancellors go into pre-election purdah for about four or five years and cannot talk about tax at all.
	I mentioned the IFS report, The poverty trade-off: work incentives and income redistribution in Britain, which came out earlier this month. I pay tribute yet again to the great work that the Joseph Rowntree Foundation does in supporting valuable public-policy initiatives of this kind. The conclusions were that Labour's reforms to date have acted to weaken both incentives to be in work at all and incentives for those in work to increase their earnings. It rightly draws particular attention to the fact that housing benefit recipients have some of the weakest work incentives of all. As the noble Baroness, Lady Hollis, pointed out, it is the interaction of that with other benefits that really makes marginal tax rates on poor people very high. The Government must face up to this very serious disincentive to work and let people on housing benefit, particularly, keep more of their earnings as they work more.
	The IFS report refers to lone parents, whom Labour talk about a great deal, and points out that this group still has the weakest work incentives of the six demographic groups that it considered. It says that the number of lone parents has more than doubled since 1979 and that this should be a key focus for the attention of policy makers. The IFS goes into considerable detail and puts a very powerful case when it states that,
	"the reforms that do the most damage to work incentives are the same aggressively means-tested ones that do most to help the poor".
	We have to face that increasing the child element of CTC in particular would reduce the incentive to work substantially for large numbers of people. The report points out how a classic increase in means-tested support is very successful in targeting money at the poor, but is very weak for work incentives. In the face of this evidence, I do not see how the noble Lord, Lord Giddens, can argue that work incentives are not weakened.
	This short debate has focused on operational difficulties, but more on what I would call fundamental design faults in the tax credits system, which, because it is so complicated, makes it operationally very difficult and undoubtedly affects work incentives.

Lord Giddens: My Lords, will the noble Lord clarify what he just said? I am not sure whether he is arguing against me. I was arguing that negative income taxes tend not to work because basically they are disincentives to work, whereas tax credit systems work much better. If they are fine-tuned properly, they help to get a lot more people into work.

Lord Oakeshott of Seagrove Bay: My Lords, I thank the noble Lord for that. I do not think that I misheard him. I do not disagree with him on negative income tax, but I understood him to say that tax credits did not have disincentive effects. Obviously, I accept that he was talking particularly about America, which may have had longer to refine the operation of the system. My point in encouraging people to study this IFS report is that as tax credits operate in the United Kingdom, there are significant disincentives to work, particularly for the poorest in our society. The principle is that it is quite wrong that the poorest people in society should face a much higher marginal tax rate than the richest people, which is the situation that we have at the moment. In Britain, we have 2 million workers who face a marginal tax rate of more than 50p in the pound and 160,000 who face a marginal tax rate of more than 90p in the pound, which is a very serious indictment of a Government after nine years in office.

Baroness Hollis of Heigham: My Lords, I apologise for intervening again on the noble Lord's contribution, which is extremely interesting. The IFS report goes into detailed analysis of household types in chapters 5 and 6 in particular, tracks them longitudinally over time and sets against that an array of different possible interventions available to Government—large family premium, CTC, working family tax credit and so on. The Institute for Fiscal Studies recognises, first, that incentives to go into and to stay in work are stronger in 2005 than in 1979 and that, secondly, notwithstanding all the other possible remedies—though some may be more effective than others—there is very little scope. Does the noble Lord agree that because of the trade-offs built into any system linking social and economic policy, government interventions would make differences at the margins that might be worth having, but that that does not mean—the IFS never says this—that tax credits as a policy should be abandoned as a result?

Lord Oakeshott of Seagrove Bay: My Lords, no, we do not say that they should be abandoned. I know of course that the noble Baroness will have read the report carefully. I have chapter 6 with me. No one is suggesting that things have not improved since 1979: it would be a grim state of affairs if they had not. It says that identifying those very serious disincentive effects—there are various charts—for some groups shows that tax credits in their current form are not working for those groups. Given all the improvements that have been made under the noble Baroness among other people, that is still a serious criticism of our system nine years into a Labour Government.

Baroness Noakes: My Lords, my noble friend Lord Northbrook has chosen for debate today a very important question which has had too little attention in your Lordships' House. I agree with the noble Lord, Lord Oakeshott, that it has been a wide-ranging and thoughtful debate which has shown the strength of the House. It has also, incidentally, given my noble friend Lord Trenchard another opportunity to remind the House about the Chancellor's raid on pension funds by way of dividend tax credits.
	The noble Lord, Lord Oakeshott, taunted me with my noble friend Lord Trenchard's reference to the report last week of my noble friend Lord Forsyth—the Tax Commission's report—which he described as excellent. I can certainly confirm that the official view is that it is an excellent report. That does not, of course, make it Conservative Party policy.
	The importance of tax credits goes beyond the routine assessment of government policies, because they are the Chancellor of the Exchequer's personal project, and they give us insight into the Chancellor and his aims. The outcomes of the scheme must reflect on him. That is important when we start to look at what might happen if the Chancellor moves into No. 10 as he clearly wishes to in the immediate future.
	The Chancellor said some four years ago, when he was launching an advertising campaign for tax credits, that:
	"The new tax credits ... are central to this Government's goals of not only tackling child poverty and making work pay but ensuring family prosperity for all".
	Those were the goals he set four years ago. During Starred Questions, the Minister told the House that these goals had been achieved. He said that,
	"this has been an ambitious system that has delivered three key achievements. It has improved incentives to work; it has reduced the tax burden on low- to middle-income families; and it has helped dramatically to reduce child poverty".—[Official Report, 7/6/06; col. 1259.]
	I should like to examine these claims and set what has been achieved against the very real problems that exist in the tax credits system, which my noble friend Lord Northbrook laid out so well.
	The first claim made by the Minister was that the tax credits system has improved incentives to work. The noble Lord, Lord Oakeshott, referred extensively to the IFS study on behalf of the Joseph Rowntree Foundation—neither organisation could be said to be a spokesman for Conservative Party thinking. The report found that incentives to work and earn more had strengthened since 1979 but they have weakened since 2000, the period during which tax credits were introduced. It said:
	"Overall, reforms under the Conservatives acted to strengthen average work incentives whereas Labour's reforms to date have weakened financial work incentives on average; since 1999 tax and benefit changes have increased the average effective marginal tax rate by almost 3 percentage points".
	We have discussed the effective marginal tax rates today. For the best paid workers in the land, such as the Minister, it is 41 per cent. As the noble Lord, Lord Oakeshott, and my noble friend Lord Trenchard have pointed out, more than 2 million workers stand to lose more than half of any increase and 160,000 would keep only 10p in the pound. As the noble Baroness, Lady Hollis, pointed out, this is the toxic effect of the combination of tax, national insurance, tax credits, council tax benefit, housing benefit and any other benefits that have a withdrawal rate. The plain fact is that means-tested benefits, which is what tax credits are, weaken work incentives. The UK has the worst poverty trap in the OECD for moving from part-time to full-time work.
	I do not dispute—I could not—that many families have benefited from the introduction of tax credits alongside part-time and low-paid work. But if effective marginal tax rates are too high, this effect will not encourage those families to progress further into reduced dependence on benefits by working more hours or otherwise seeking higher pay. Instead, they become trapped in benefit dependence at a higher level of income than before—a new form of poverty trap. This dynamic will, over time, tend to produce higher levels of benefit dependence than before because the incentive to escape benefit dependency is too weak. The cost to the public purse, currently over £15 billion a year for tax credits alone, will remain high.
	The second claim is that tax credits have reduced the tax burden on low- to middle-income families. One of the features of the tax system in this country is that income is taxed at relatively low levels and that fiscal drag, especially engineered by the current Chancellor by holding allowances down below the rate of earnings growth, has ensured that many more people come within the fiscal net. That has been a feature of the past 10 years. So it might well be true to say that some low- to middle-income families now pay less tax, but that rather begs the question whether they should, in a rational system, have been paying tax in the first place. It certainly begs the question whether there should be two parallel systems—to collect tax and to pay tax credits—if the effect is only to churn income between the two.
	The claim to reduce the tax burden on low- to middle-income families sits very uneasily with the fact that, in practice, child tax credits are given up to income levels of £56,000 and, if the £25,000 disregard is added, up to income levels of well beyond £80,000.
	The third claim is of a dramatic reduction in child poverty. Let me be clear: we applaud reductions in child poverty, and I am not going to talk this evening about the Government missing their own targets. The tax credit system has certainly directed further resources to families with children, thereby helping to reduce poverty. But the Joseph Rowntree/IFS report highlights the fact that while increasing the child element of the child tax credit has had the direct effect of reducing child poverty, it can have the indirect effect of increasing poverty by weakening the incentives of parents to work, thereby taking themselves out of poverty eventually.
	Since the children of families in which parents do not work are themselves more likely to be workless and benefit dependent, it may simply be that the reduction in child poverty through tax credits hardwires benefit dependency into the system. I am reminded of Mr Alan Milburn's conclusion earlier this year in another place that, in the past decade,
	"poverty has become more entrenched".—[Official Report, Commons, 28/3/06; col. 710.]
	It is not the aims of tax credits about which we have concerns; it is whether they are the best method of dealing with the problems that exist in our society. I have outlined some of those doubts, but they are reinforced by the way in which tax credits have been implemented, as my noble friend Lord Northbrook so excellently laid out this evening. I should like to read out a brief summary of the charge sheet. They are expensive to operate, costing, I believe, more than £500 million a year. My noble friend Lord Trenchard asked the Minister that question, and if I have that figure wrong, I look forward to being corrected when the noble Lord responds. The way in which tax credits have been implemented has caused genuine hardship to very many families, at the extreme requiring some to rely on food parcels from the Salvation Army just to survive the chaos of implementation. The system has been poorly implemented in the way that it has opened itself up to major fraud via the online portal and the operation of wholly inadequate helplines for much of the period. Tax credits are so badly designed that nearly 2 million overpayments and 1 million underpayments occur each year.
	I said at the outset that I would want to see how the Chancellor's own project of tax credits could shed light on what kind of Prime Minister he would be. If the experience of the tax credit scheme were anything to go by, it would indicate that ambitious aims are not matched by effective delivery. That is true whether effectiveness is measured at the level of practical implementation or at the level of achieving good, long-term outcomes. It does not bode well for the country.

Lord McKenzie of Luton: My Lords, I thank the noble Lord, Lord Northbrook, for initiating this debate and all noble Lords who have spoken. I have had posed to me this evening far more questions than I could possibly answer if I had an hour in which to speak, but I will do my best.
	Tax credits help support 20 million people—6 million families and just over 10 million children. They have made a significant difference to the well-being of families and individuals across Britain. The take-up of tax credits is substantially higher than in any previous system of income-related financial support for in-work families who most need it. In the first year of tax credits, 93 per cent of families on incomes below £10,000 claimed their entitlement. That should be compared with a take-up rate of 50 per cent for the early years of family income supplement, 57 per cent for family credit and, at best, 65 per cent for working families tax credit. Take-up is around 80 per cent across the board and 93 per cent for those most in need.
	I reiterate that tax credits have delivered three major goals. They have improved incentives to work; they have reduced tax burdens for low-to-middle-income families; and they have dramatically reduced child poverty. Tax credits in the context of our wider economic stability have contributed since the spring of 1997 to an increase of more than 2 million in the number of people in work, with long-term unemployment reduced by some 450,000.
	Tax credits have reduced the tax burden. The latest OECD study shows a large fall in the tax burden for low-to-middle-income families as a result of tax credits. The burden on a single-earner couple with two children earning £21,000 a year has fallen from more than 17 per cent of gross earnings in 1997 to 9.8 per cent in 2004. That is the lowest rate of any G7 country. In the UK, a single-earner family with two children can now earn just under two thirds of the average wage before it starts to pay any net tax. Tax credits have helped ensure that the number of families with children paying no net tax has risen from under 2.5 million in 1998 to more than 3 million this year. They have made a major contribution to reducing child poverty, with 700,000 children lifted out of relative poverty since 1997. More than 1.8 million fewer children are in absolute low-income families than in 1997 on a before-housing-costs basis. I believe that that is an achievement that we would all applaud. My noble friend Lord Giddens made another important point about tax credits. He said that they delivered support in a way which is non-stigmatising.
	The introduction of tax credits has been a huge undertaking for HMRC. It is the biggest single change to the welfare state since the Beveridge reforms. Problems with the IT system in the early days created difficulties, but HMRC has made significant progress. There is, however, more to be done. Last May, the Paymaster General set out a series of administrative measures designed to reduce the risk of errors, to clarify communications with tax credit recipients and to improve procedures for recovering overpayments. Since then, significant progress has been made in each of these areas. Building on the progress so far, major software releases were successfully implemented last November and this April, delivering real improvements in operational performance, not to mention in the service to claimants.
	Since the introduction of tax credits, HMRC has worked closely with the voluntary and community sector to improve its service to claimants. For example, responding to feedback from the voluntary and community sectors, it has revised award notices to include a clearer summary of what will be paid and, for the first time, an explanation of how this has been calculated. HMRC has been working with the voluntary and community sector also to make claimants aware of their entitlement to tax credits; for example, with the tax credits take-up resource pack, which was provided by citizens advice but funded by HMRC. Building on the progress made on administration in Pre-Budget Report 2005, the Government announced a package of further improvements to the tax credits system. This struck a balance between providing more certainty and stability for families, particularly those on lower incomes, and maintaining the flexibility to respond to changes in income and family circumstances.
	A number of noble Lords touched on the issue of end-year adjustments, which are inevitably an integral part of a flexible financial support system. Payments are based on household incomes which can, of course, change during the course of the year. Payments are therefore subject to adjustment during the course of the year and, if necessary, at the end of the year once these changes in incomes are known.
	National statistics show that year-end adjustments leading to an overpayment have fallen by one-fifth from 2003-04 to 2004-05. Improved performance of the tax credits system has meant that fewer overpayments are now caused by IT or administrative error. The statistic of 97.75 per cent accuracy in processing and calculating awards was quoted by my noble friend Lady Hollis. HMRC expects to recover the majority of the money overpaid, except where there has been a mistake by HMRC and it is not reasonable to expect the claimant to have noticed the error.
	The national statistics relate to 2004-05, and so do not show the impact of measures announced at the time of the 2005 Pre-Budget Report to give greater certainty to families while maintaining flexibility to respond to changing circumstances. Once these come fully into effect the level of year-end adjustments are expected to fall by a further third in future years. Eliminating the need for adjustments altogether would require a move to a fixed system in which eligibility was based on the previous year's income and circumstances—a system where, as a result, flexibility would be diminished. This flexibility to respond to changing circumstances is a key part of the system, especially in today's modern labour market where in any single year 3 million people change jobs and 200,000 men and women who move into new or better jobs see their family income rise by more than £10,000.
	Noble Lords raised a number of questions. The noble Lord, Lord Northbrook, pressed me on a whole raft of questions relating to the Treasury Select Committee report, and I hope that he will forgive me if I do not deal with all of those in detail. The Government have not responded formally to that report but will do so shortly, and perhaps we might have another debate in due course when those responses have been made formally.
	I was asked about overpayment awards for 2004-05. The amount currently calculated is £1.8 billion. The figures for 2005-06 are not yet available as the claims have not yet been finalised.
	On our confidence about the costings relating to the £25,000 disregard, we have two years' data from 2003-04 and the 2004-05 overpayments, which help us to a better estimate of the costs involved. I refer the noble Lord, Lord Northbrook, to the letter written to the Public Accounts Committee, which sets out some of the background to that.
	The noble Lord asked, too, about the causes of overpayment. The main causes are income rises, families overestimating income falls, provisional payments being made on out-of-date information and delays in reporting changes of circumstances.
	On the issue of error and fraud, figures published on 11 July gave HMRC's estimate of error and fraud in the tax credits system for 2003-04, which was of course several years ago. The information on organised fraud shows that HMRC successfully stopped the majority of claims identified as being submitted by organised fraudsters. Some £409 million of fraudulent claims have been prevented, and there is no evidence of new major organised frauds comparable to those involving organisations such as DWP and Network Rail, which were reported to the House in January. It is planned to increase the number of compliance staff by 190.
	My noble friend Lady Hollis raised the issue of the large family premium. The Government recognise that children in large families are at a disproportionate risk of being poor. The 2004 child poverty review set out a long-term aspiration to improve the financial support available to large families. The introduction and increase in the per child element of the child tax credit has disproportionately benefited larger families and, compared to 1998-99, the risk of poverty has fallen by 33 per cent for large families compared to 23 per cent overall. Nevertheless we will continue to consider options to go further, including the introduction of large family unlimited tax credits, along with equalising child benefits, as others have suggested, and increasing the child element.
	I am afraid I do not have any good news about the position on financial support for grandparents. I think my noble friend is aware of the situation. It is one thing where there are formal childcare arrangements in place, but it is difficult for a Government to involve themselves in commercialising arrangements within families. It is important to differentiate between situations where the Government are paying, such as the carer's allowance, and those where you would be encouraging payments between family members. There would be difficulties if it were judged that grandparents were not felt able to fully undertake their responsibilities.
	The issue of regional differences is an interesting one. I think it has been considered recently in relation to the minimum wage. The Government felt it was not the right way to go. Marginal tax rates, which a number of noble Lords raised, are high but effective marginal rates of over 70 per cent have fallen by half a million since 1997.
	I admire the ingenuity of the noble Viscount, Lord Trenchard, on the dividend tax credit. Forgive me if I do not rehearse the debates we have had on that before, but I am sure we will have ample opportunities to do so in the future. The cost of administering the system was £467 million in 2005-06, which must be something like 0.25 pence in the pound.
	The noble Viscount made reference, as did others, to the Tax Commission, chaired by the noble Lord, Lord Forsyth. We would say that transferable tax allowance is an untargeted measure that is of most benefit to those on higher incomes. Indeed, policies have increased the personal allowance by £7,185 by abolishing the 10p starting rate, which, it was suggested, would cost £4.6 billion. An increase in the personal allowance disproportionately benefits the better-off on higher marginal tax rates and is therefore regressive. Changes to tax allowances cannot reduce tax liability below zero and therefore fail to support the poorest. The combined effect of the new higher income tax allowance, the proposed abolition of the 10p starting rate, the new 20p basic rate and the abolition of tax credits for hard-working families higher up the income scale would mean that of the poorest quarter of households only one-third would see any benefit from the package and two-thirds would not get a penny, while every single household in the wealthiest quarter would benefit. We simply do not see that as the right way to go.
	My noble friend Lord Giddens raised issues arising from the Joseph Rowntree report, which suggests a basic rate of income tax of 37 per cent to pay for changes to the system. If anything, we would say the tax system they have designed is very much like the current system except with higher rates, and we have a manifesto commitment not to raise basic or higher rates of income tax.
	We have touched upon issues of year-end adjustments. I quote again the figure that each year at least 200,000 men and women move into new and better jobs and see their family income rise by more than £10,000. The noble Lord, Lord Oakeshott, in particular, talked about the IFS report. In response I say: look at the evidence. Employment, which my noble friend Lord Giddens touched on, is at record levels, with 28 million people in work. The UK's employment rate is the highest of the G7 economies bar the US and Canada. Since 1997, New Deal programmes, which are part of the strategy, have helped reduce long-term youth unemployment and long-term unemployment by over two-thirds. Working tax credit provides financial support on top of earnings and, together with the national minimum wage, helps to improve work incentives and relieve in-work poverty. Lone parent employment has risen by 11.3 percentage points to 56.6 per cent, the highest on record. There are now over 1 million lone parents in work, over 300,000 more than in 1997.
	The noble Baroness, Lady Noakes, made a number of points on marginal tax-rate issues and on the Chancellor's approach to those matters. I have no doubt that a Chancellor who is about tackling poverty and improving incentives to work and who wishes to reduce tax burdens for low-to-middle-income families would make an excellent Prime Minister, as I am sure that he will.
	I have run out of time. I hope that noble Lords will forgive me for not having dealt with all the points that have been raised. I conclude by saying that tax credits and economic stability have helped to increase the number of people in work by more than 2 million since spring 1997. Since 1997, long-term unemployment has reduced by 450,000. Tax credits have improved work incentives, reduced the tax burden on low-to- middle-income families and helped to reduce child poverty dramatically. Of course, we should remain vigilant to the administrative challenges that these bold measures create, but we should celebrate the outcome of the policy and the substantial improvement it has made to the lives of many.

House adjourned at ten minutes past eight o'clock.